Who Earns $100 Million and is in Bankruptcy?
The Patriots don’t play the Philadelphia Eagles until Thanksgiving Sunday —November 27. The question is not who will win. We here in Massachusetts know the New England Patriots will be ready for them come Week 12. The question, for those of us who follow Massachusetts bankruptcy law, is how can Philadelphia quarterback
First, how did he get into bankruptcy? Just like everyone else we see in the Massachusetts bankruptcy court: he overspent. Couldn’t that salary get him out? Sure, but, like many folks who file for bankruptcy protection in Massachusetts, an unforeseen circumstance arose. No, most folks that file in Massachusetts were not convicted of cruelty to animal and illegal betting, and sent to jail like Vick. But many of our clients have an unexpected event which triggers a financial demise. Those include loss of income, a divorce, unexpected expenses associated with a spouse, child or family member. In any event, there becomes no way to pay the household expenses and pay on the debt.
Vick is not a client, nor a contributor to our bankruptcy blog, http://www.bostonbankruptcylawyerblog.com/, so we can only write about what we know. With Vick, some of the expenses seem outrageous. He was buying his friends new cars, his mother an 8,000 square foot house, and had a host of hangers-on that he housed, fed and paid. In 2005, Forbes estimated that he was grossing $37.5 million per year as the quarterback for the Atlanta Falcons; this was salary plus endorsements. He had contracts with Nike, Coke and Kraft foods.
Vick served 21 months in jail. Of course, he was also suspended from football. In addition to the cruelty to animals’ convictions, the National Football League held a special aberrance to gambling. When the Atlanta Falcons released him and demanded $20 million for reimbursement for his violations of the league’s “conduct” policy, he filed for arbitration and lost: he had used his signing bonus partially to fund the illegal activities.
Without a salary, trying to maintain six homes, maintain 10 vehicles, pay his lawyers and other professionals was difficult. The bankruptcy pleadings indicate he was spending $30,000 per month to maintain his various family members, ex-girlfriend and their child, fiancée and their children, friends and associates. He filed for bankruptcy protection in July 2008. According to summaries of the bankruptcy filings, Michael Vick had $16.1 million in assets and over $20 million in debt. He was in litigation with his former agent. He lost monies to a corrupt financial “advisor” named Mary Wong, who ended up in her own personal bankruptcy and in litigation with numerous of Vick’s creditors.
The debts included monies owed to the Atlanta Falcons for the aforementioned breach of contract, a loan to the Royal bank of Canada, along with various secured and unsecured debts. Another creditor was Joel Enterprises, a company that had a contract with Vick which Vick was found to have breached weeks after he left college for the NFL.
After his incarceration in federal prison in Levenworth, Kansas, he signed a one year contract for $1.6 million with the Eagles, in August 2009. That was two years ago. There was a better contract in 2010. Now it’s $100 million for six years, one of the top contracts in all of the NFL!
Vick’s Chapter 11 plan was to pay off debts at 80 cents on the dollar; a significant factor of the plan was that over $750,000 and up to $2.5 million, creditors get 25 percent; over $2.5 million, creditors get, 30 percent; and then 40% if he exceeds $10 million threshold. The plan was ultimately approved in August 2009.
It’s not just Michael Vick who finds himself in financial trouble. Other NLF players have been victim to financial fraud, or at least severe overreaching. There are estimates that between 1999 and 2002 78 NFL “millionaires” players lost over $42 million in acts of fraud perpetrated by financial advisers.
Even if you are not an elite NFL athlete with a new contract that bumps up against Tom Brady’s, you may simply need some solid legal advice regarding filing for bankruptcy in Massachusetts. That’s where over 25 years of personal attention to our clients will be focused on you. Call us!