Shilo Sanders' bankruptcy case: Judge issues another set of rulings over NIL deals

Colorado's defensive back goes through another round of court proceedings with potential trial looming

Kris Miller/ SI

In the latest developments of Shilo Sanders' bankruptcy case, a federal judge has once again ruled on attempts to dismiss complaints brought forward by John Darjean. This is the second time since June that Sanders' efforts to have the case dismissed have been rejected, as first reported by USA TODAY Sports. 

The first ruling allowed Darjean to amend his complaint, which he did, leading Sanders’ attorneys to file another motion for dismissal. However, in the most recent ruling on Monday, Judge Michael Romero denied Sanders’ request in part, allowing the majority of Darjean's claims to proceed to trial.

One of the primary issues in the case revolves around Sanders' NIL deals. It has become a sticking point, with the court questioning if the Colorado Buffaloes defensive back omitted his business deals from assets declared to the trustee, according to documents reviewed by SI. 

Sanders has capitalized on NIL opportunities throughout his time in Colorado. However, none of those transactions have been listed within court filings. Darjean alleges that this could be considered fraudulent under bankruptcy law. The judge noted that Darjean presented sufficient evidence that Sanders may have deleted social media posts and failed to produce records related to his NIL deals, which could be construed as business records in the bankruptcy proceedings. This omission, Darjean argues, is grounds to deny Sanders a discharge of his debt.

Judge Romero ruled that Darjean’s claims about Sanders' deletion of social media posts and the failure to provide financial records could support Darjean's case. This prompted the judge to deny Sanders' attempt to dismiss the complaint on these grounds, further complicating his efforts to be released from his financial obligations. He also stopped short of saying if Sanders intentionally hid financial records from filings to the court.

“Darjean sufficiently identified assets that were at one time owned by 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.” The Judge went on to write, “If Sanders does monetize his NIL rights through social media posts, as alleged by Darjean, those posts could be construed as business records."

There were at least 32 times that Sanders failed to disclose income generated from an array of avenues, according to previous court records in the case. From Oct. 2022 to Sept. 2023, Sanders appeared in advertisements for KFC, Metaquest, TurboTax, Oikos Yogurt, Champ Sports, Porsche, Google, and Tint my Ride. This doesn't include income generated by social media channels.

On the other hand, one of Darjean's remaining claims, which sought to recover attorneys’ fees from Sanders, was dismissed. Additionally, a portion of another claim, which alleged that Sanders fraudulently transferred his NIL rights or compensation, was also thrown out due to insufficient detail. Despite these small victories, the bulk of Darjean’s claims remain intact, and the case is set to proceed and could be set for trial.  

At the heart of the dispute, Sanders seeks a fresh start through bankruptcy, which would allow him to move forward without the burden of his immense debt. However, Darjean is fighting hard to prevent this outcome, arguing that Sanders' actions, both in the original incident and during the bankruptcy proceedings, should keep him liable for the multi-million dollar debt. Another pending complaint from Darjean also argues that the debt should not be discharged due to its connection to a willful and malicious injury, further complicating Sanders’ legal challenges.

Sanders' legal battle is tied to a significant $11.89 million judgment. This debt stems from an incident in 2015 when Shilo was accused of inflicting permanent injuries on Darjean, a former school security guard. According to an initial police report, Sanders delivered a roundhouse elbow to his upper chest, leading to a lawsuit that resulted in a default judgment against Sanders in 2022. Sanders, however, did not appear at the trial to defend himself, which led to the substantial ruling in favor of Darjean.

Sanders has been faced with this overwhelming financial burden and filed bankruptcy in Colorado last October, seeking relief through the discharge of his debt. The legal dispute now revolves around whether Sanders should be granted this relief or whether Darjean's claims can prevent him from avoiding repayment of his debt.

As Sanders continues to grapple with his legal troubles, he is also focused on returning to the field. The Buffs safety is currently sidelined by a forearm injury he suffered against Nebraska. Coach Prime commented on Shilo's status during a recent press conference and said he'll likely be ready to go after CU's bye week. However, the outcome of his bankruptcy case remains uncertain and will likely have significant financial and personal ramifications for the 24-year-old athlete.