Some of you may have heard about Nevin Shapiro, a University of Miami football booster and convicted Ponzi schemer. He claims that he provided hundreds of thousands of dollars of impermissible benefits to UM football players over a 9 or 10 year period. Then his $930 million Ponzi scheme blew up and his investment firm filed bankruptcy.
I have heard members of the national sports media speculate whether any NFL players will be sued by the bankruptcy trustee to recover any of this money. It's always good to see bankruptcy litigation mentioned on ESPN, but it's not going to happen. It may be possible for some football players to be sued, but it won't be Devin Hester or any other professional players. The only football players at risk are those who received payments in the 90 days preceding the investment firm's bankruptcy filing last summer.
These are interesting lawsuits. A bankruptcy trustee can avoid a transfer made by the debtor if it is preferential to one creditor over the others. The preference period is 90 days before the filing, unless the payment was made to an insider (family, business partner, etc.), then it is a one year look back. In order to avoid the transfer, the trustee has to file an adversary proceeding against the creditor.
There are several defenses to a preference action, none of which will apply to football players. Valid defenses include when the payment was made in the normal course of business between the debtor and creditor and where the creditor provides "new value" to the debtor in the form of goods, services, or new credit.
Depending on which side of the game you're on, the preference period seems either really long or really short. This time, it seems extremely short considering all of the big time players that have come from Miami in the past 10 years. The depositions in that case would be fantastic. I would love to examine Michael Irvin, Ray Lewis, Warren Sapp, etc. under oath concerning the night life and party scene in Miami while they were on the payroll.
2 comments:
I think the Trustee can go back farther if the money constitutes a fraudulent transfer. The Illinois Uniform Fraudulent Transfer Act has a three- or four-year look-back period.
Excellent point. I agree completely.
Post a Comment