A judge denied Shilo Sanders’ request to dismiss a lawsuit from the trustee in Sanders’ bankruptcy case.
The trustee alleges Sanders made unauthorized transfers and seeks to recover NIL earnings for creditors.
Sanders filed for bankruptcy to discharge an $11.89 million debt stemming from an incident in 2015.
A federal bankruptcy judge has issued a ruling against former Colorado football player Shilo Sanders, denying a request by Sanders to dismiss a complaint against him from the trustee overseeing Sanders’ bankruptcy case.
The trustee had sued Sanders in October, two years after the son of Colorado coach Deion Sanders filed for bankruptcy in October 2023 in an effort to get out of more than $11 million in debt.
The trustee alleged Shilo Sanders had violated bankruptcy law by making unauthorized transfers of approximately $250,000. The suit sought to recover that money and more, which included Sanders’ college income from his name, image and likeness (NIL) through his businesses “Big 21” and “Headache Gang.”
In response, Sanders’ attorney said the trustee’s lawsuit was misguided and sought to have it dismissed. But Judge Michael Romero rejected Sanders’ arguments and is allowing the trustee’s lawsuit against Sanders to proceed toward a possible trial.
“The Court’s role in deciding the Motion to Dismiss is not to resolve factual disputes or weigh potential evidence outside the four corners of the Complaint,” Judge Michael Romero wrote in his ruling March 4. “The Trustee has otherwise sufficiently pled the necessary elements of his claims. He has also supported his claims with sufficient factual allegations regarding Sanders’ bank accounts, his NIL proceeds deposits into the Big 21 Account, and Sanders’ control over Big 21 and Headache Gang. Whether the evidence will ultimately substantiate the Trustee’s claims is a matter to be decided at trial.”
What is this case against Shilo Sanders about?
There are multiple parts to Sanders’ bankruptcy case, including this complaint from the trustee, David Wadsworth, who is tasked with rounding up Sanders’ non-exempt assets for the benefit of Sanders’ creditors.
This ruling is separate from another pivotal part of Sanders’ bankruptcy litigation that is set for trial Aug. 31 and does not involve the trustee.
The big issue in the trustee’s lawsuit against Sanders is to whom the money in question belongs — the bankruptcy estate or Sanders. Sanders’ earnings before he filed the bankruptcy petition generally belong to the bankruptcy estate for the benefit of creditors, while earnings that came from work after the filing belong to Sanders.
What did the judge’s ruling against Shilo Sanders mean?
Sanders’ attorney, Keri Riley, stated in court documents the money in question belonged to Sanders because they were “post-petition earnings.”
The trustee is disputing that and wants an accounting. The judge basically said this is a matter to be decided at a trial later, not in a motion to dismiss.
“Identifying the true nature of the funds will require presenting evidence and resolving numerous factual issues,” the judge ruled. “For example, whether the funds are Sanders’ pre- post-petition earnings will depend on the type of services Sanders performed, when he performed them, and the terms of the contract(s) (if any) requiring those services.”
Why did Shilo Sanders file for bankruptcy?
Shilo, 26, is the middle son of Deion Sanders. He didn’t go into debt because of unpaid loans or overspending on credit cards. He instead was hit with a civil court judgment in Dallas in 2022 that put him on the hook for $11.89 million, all owed to one man, John Darjean, a former security guard at his school in Dallas.
Darjean sued Sanders in 2016, alleging Sanders left him with permanent and severe injuries when he punched and elbowed him in head and neck area at school in 2015, when Shilo was 15. Sanders claimed it was self-defense but didn’t show up for the trial in 2022, which led to the default judgment against him.
Sanders filed for Chapter 7 bankruptcy in 2023 after Darjean moved to collect on that debt. Sanders’ goal is to get that debt discharged in bankruptcy court. But Darjean is fighting it and arguing the law doesn’t allow him to discharge it in this case because the debt stems from a “willful and malicious” injury.
That’s the issue in the trial set for Aug. 31. This separate trustee lawsuit has no trial date yet.
Shilo Sanders is currently out of football but has worked as an influencer and recently considered acting lessons after moving to Miami. He and his brother Shedeur Sanders also recently appeared as fashion models in Paris.
Follow reporter Brent Schrotenboer @Schrotenboer. Email: bschrotenb@usatoday.com
