Rekubit Exchange:Bankruptcy judge issues new ruling in case of Colorado football player Shilo Sanders

A federal judge has issued another ruling in the bankruptcy case of Colorado football player Shilo Sanders,Rekubit Exchange once again denying Sanders’ attempt to fully dismiss a complaint from the former school security guard whom Sanders still owes $11 million.

This is the second time since June that the judge has ruled on a request by Sanders to dismiss one of the complaints filed by the former security guard, John Darjean. The first time, Judge Michael Romero dismissed some parts of Darjean’s complaint but allowed Darjean to amend those parts and try again. He did, leading Sanders’ attorneys to ask the court to dismiss Darjean's amended complaint as well.

But the judge didn’t grant Sanders' full request in his new ruling Monday. As a result, much of Darjean’s complaint in this case can proceed to trial as he tries to prevent Sanders from getting off the hook of his $11 million debt to him. Sanders, 24, filed for bankruptcy last October and is the son of Colorado coach Deion Sanders.

“Darjean sufficiently identified assets that were at one time owned by the Sanders but are no longer available to pay creditors because they are not listed in the schedules,” the judge wrote in the ruling Monday. “As to those specific omitted assets, the Court finds Darjean has sufficiently stated a claim under (the law).”

Judge rules on Shilo Sanders' NIL issues

The ruling took on several issues raised by Darjean about Sanders' compensation from his name, image and likeness deals (NIL) and whether Sanders has improperly concealed or omitted assets from them in the bankruptcy case.

Darjean argued that deletion of these records can serve as a basis to deny Sanders a discharge of his debt. Under the law, debtors are not allowed to conceal or destroy records of their financial situation.

“Darjean asserts in the Amended Complaint that Sanders made certain social media posts about paid promotional appearances and displaying certain jewelry and other assets, which he later deleted,” the judge wrote.

The judge denied Sanders’ attempt to dismiss this particular claim, too. He noted the trustee in this bankruptcy proceeding previously asked Sanders to turn over some records but didn’t produce them, according to the trustee. Sanders’ attorneys have said Sanders has cooperated.

“In this case, Sanders’s business and income is derived from his NIL rights,” the judge wrote. “If Sanders does monetize his NIL rights through social media posts, as alleged by Darjean, those posts could be construed as business records. Thus, Darjean’s allegations about deletion of social media posts may support his… claim. The Court will therefore deny Sanders’s Renewed Motion to dismiss the… claim to the extent it is based on records in the Trustee’s Motion for Turnover and social media posts.”

What else did the ruling say and why is this happening?

The judge officially granted in part and denied in part Sanders’ motion to dismiss the renewed complaint by Darjean. But the judge only fully threw out one of Darjean’s five remaining claims – a request by Darjean to recover attorneys’ fees from Sanders. The judge also dismissed part of one of Darjean’s claims, which had alleged Sanders had fraudulently transferred his NIL rights or NIL compensation. The judge said there wasn’t sufficient detail to sustain that part of the claim but otherwise allowed Darjean’s claims to proceed.

Shilo Sanders filed for bankruptcy after Darjean attempted to collect on Sanders' $11 million debt to him stemming from an incident in 2015, when Shilo was in ninth grade. Darjean alleged that Shilo gave him permanent injuries after Sanders swung a roundhouse elbow into his upper chest when Darjean was trying to confiscate his phone at school.

Darjean then sued Sanders for damages but the case didn’t go to trial until 2022. Sanders didn’t show up to defend himself at trial, but the court still heard evidence in the case and entered an $11 million default judgment against Sanders.  

What is Shilo Sanders hoping to achieve in this case?

By filing for bankruptcy, Sanders is hoping to get that debt discharged so he can get a “fresh start in life, free from the oppressive burden of his debts,” according to Sanders’ attorneys.

In response, Darjean is fighting to keep Sanders on the hook for that debt and has filed two complaints in bankruptcy court to prevent the discharge of it. One is the complaint the judge ruled on Monday, which alleges that Sanders improperly concealed or omitted assets from the bankruptcy proceeding.

The other complaint also remains pending and argues that the law prevents Sanders from discharging this debt because it stems from a willful and malicious injury.

Sanders is a graduate student at Colorado and recently has been sidelined by a forearm injury. He is expected to return to the field for the Buffaloes’ next game Oct. 12 against Kansas State.

Follow reporter Brent Schrotenboer @Schrotenboer. Email: [email protected]