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- A judge denied Shiloh Sanders’ request to dismiss the suit from the trustee in Sanders’ bankruptcy case.
- The trustees are seeking to recover NIL proceeds for creditors, alleging that Mr. Sanders made fraudulent transfers.
- Mr. Sanders filed for bankruptcy to discharge $11.89 million in debt stemming from a 2015 incident.
A federal bankruptcy judge has ruled against former Colorado football player Shiloh Sanders’ request to dismiss a lawsuit filed by the trustee overseeing Sanders’ bankruptcy case.
The trustees sued Sanders in October, two years after Colorado Superintendent Deion Sanders’ son filed for bankruptcy in October 2023 to escape more than $11 million in debt.
The trustee alleged that Shiloh Sanders violated bankruptcy law by fraudulently transferring approximately $250,000. The lawsuit sought to recover that and other monies, including university income derived from Sanders’ name, image and likeness (NIL) through his businesses Big 21 and Headache Gang.
In response, Sanders’ lawyers called the trustee’s lawsuit misguided and asked for the lawsuit to be dismissed. But Judge Michael Romero rejected Sanders’ claims and allowed the trustee’s case against him to proceed to trial.
“The court’s role in deciding a motion to dismiss is not to resolve disputes of fact or consider potential evidence outside the four corners of the complaint,” Judge Michael Romero wrote in his March 4 ruling. “The Trustee otherwise fully admitted the requisite elements of the claim and supported his claim with sufficient factual allegations regarding Sanders’ bank accounts, the deposits of NIL proceeds into the Big 21 account, and Sanders’ control over Big 21 and the Head A Gang.” Whether the evidence ultimately supports the Trustee’s claims is a question to be determined at trial. ”
What is this case against Shiloh Sanders about?
Sanders’ bankruptcy case has multiple parts, including this complaint from David Wadsworth, the trustee tasked with liquidating Sanders’ non-exempt assets for the benefit of Sanders’ creditors.
The ruling is separate from another key part of Sanders’ bankruptcy case, which is scheduled for trial on Aug. 31 and does not involve a trustee.
A major issue in the trustee’s lawsuit against Sanders is whether the funds in question belong to the bankruptcy estate or to Sanders. Mr. Sanders’ income before he filed for bankruptcy would normally belong to the bankruptcy estate for the benefit of his creditors, but any income he earned from work after he filed would belong to Mr. Sanders.
What does the judge’s ruling against Shiloh Sanders mean?
Kelly Reilly, Sanders’ attorney, said in court documents that the money in question belongs to Sanders because it is “post-petition proceeds.”
The trustees object to this and are seeking an accounting treatment. The judge essentially said this was a matter to be decided at a later trial, not a motion to dismiss.
“Identifying the nature of the funds requires presenting evidence and resolving a number of factual issues,” the judge ruled. “For example, whether the funds are Mr. Sanders’ pre- and post-petition proceeds depends on the type of services Mr. Sanders performed, when he performed them, and the terms of the contract (if any) requiring those services.”
Why did Shiloh Sanders file for bankruptcy?
Shiloh, 26, is Deion Sanders’ second son. He never went into debt due to unpaid loans or overspending on credit cards. Instead, he was awarded $11.89 million in damages in a civil court judgment in Dallas in 2022. All that money had to be paid to one man, John Darjan, a former Dallas school security guard.
D’Argent sued Sanders in 2016, alleging that in 2015, when Shiloh was 15 years old, Sanders punched and elbowed her in the head and neck area at school, causing serious permanent injuries. Sanders claimed self-defense, but did not appear at trial in 2022, leading to a default judgment against Dargent.
Sanders filed for Chapter 7 bankruptcy in 2023 as Dargent moved to collect on the debt. Sanders’ goal is to have that debt discharged in bankruptcy court. But Dargent is fighting this, arguing that the debt cannot be discharged by law in this case because it resulted from an “intentional and malicious” injury.
That’s the issue at trial scheduled for August 31st. A trial date has not yet been set for this separate receivership case.
Although Shiloh Sanders is currently away from football, he works as an influencer and recently considered taking acting lessons after moving to Miami. He and his brother Shedur Saunders recently appeared in Paris as fashion models.
Follow reporter Brent Schrotenboer @Schrotenboer. Email: bschrotenb@usatoday.com
