Shilo Sanders – son of former NFL star and current NCAA football coach for the University of Colorado, Deion Sanders – filed for chapter 7 bankruptcy on October 23, 2023 in the United States Bankruptcy Court for the District of Colorado. Sanders’ primary motivation in seeking bankruptcy relief was to discharge an $11.89 million judgment against him in a case brought by a security guard Sanders assaulted in 2015.
Sanders’ ability to obtain a discharge in bankruptcy hinges on three key factors: 1. Whether Sanders’ statements in his bankruptcy schedules may be perceived by the court as knowingly false; 2. Whether his filing the case may be perceived by the court as an abuse of the Bankruptcy Code; and 3. Whether the court finds that the judgment debt itself may be excluded from discharge.
Sanders is known to have received significant earnings through major sponsorship deals following the NCAA’s 2021 decision to allow student-athletes to profit off their name, image, and likeness (“NIL”). The chapter 7 trustee appointed to administer Sanders’ case is currently investigating whether he has truthfully made all required disclosures in his bankruptcy filing, particularly as it relates to income earned from NIL deals.
Additionally, the security guard has filed an adversary proceeding challenging Sanders’ ability to discharge the debt arising from what he alleges was a willful and malicious assault. Although the Bankruptcy Code is intended to give debtors a fresh start, it excludes “certain categories of debts from a debtor’s discharge based on a debtor’s unacceptable conduct, such as dishonesty, fraud, or intentional injury.” Perry v. Judge (In re Judge), 630 B.R. 338, 344 (B.A.P. 10th Cir. 2021). One category not subject to discharge is a debt arising from “willful and malicious injury by the debtor to another entity or to the property of another entity.” 11 U.S.C. § 523(a)(6). Discharge may also be withheld or revoked from a debtor who makes a false statement in connection with their bankruptcy case, such as misrepresenting their scheduled income. 11 U.S.C. § 727(a)(4).
The Sanders case highlights the importance of a debtor making complete and accurate disclosures. It is also a reminder that some debts may not be discharged in bankruptcy. The experienced insolvency professionals at Wolfson Bolton Kochis PLLC represent both debtors and creditors in developing and implementing case strategies to discharge or protect judgment debts in bankruptcy.
