Bankrupt XFL Pays Former Players a Fraction Of Their Unpaid Wages
Nevada’s Trusted Bankruptcy Attorneys Discuss The XFL Bankruptcy Case
On January 25, 2018, Vince McMahon of WWE fame founded a new football league called the XFL. Even with that kind of name attached to the league, the XFL was not immune to the effects of the coronavirus pandemic. On April 13, 2020, the XFL declared bankruptcy. Unfortunately, this bankruptcy filing has left some of its creditors- its own players- out in the cold. There are 8 XFL teams, and several players are owed unpaid wages. The average amount owed to each player is approximately $16,000. Some players will only receive 4 cents to every dollar they are owed in the bankruptcy.
The XFL & Chapter 11 Bankruptcy
This doesn’t mean the end of the XFL. Alpha Entertainment, LLC, the XFL’s parent company, filed bankruptcy under Chapter 11. This type of bankruptcy, which is available to both consumers and businesses, lets businesses large and small continue operating. Because of its complexity and expense, Chapter 11 is typically only used by affluent individuals or large companies. However, there are provisions available for small businesses under Chapter 11.
What makes Chapter 11 bankruptcy unique is the panel of creditors. When an individual or business files Chapter 11 bankruptcy, its top creditors will form a committee. This committee has authority over major business decisions while the bankruptcy is active. For example, opening new store locations or starting a new product line would be within the committee’s authority. However, the company can continue with day-to-day operations with usual management while the case is pending. The company must also submit a plan to address their debt situation, which the committee must vote on for approval. There are several ways a company might deal with debts. They may find new funding, or find a buyer for the company. Some debts may be converted into ownership shares. The company could significantly downsize or retool operations. In the XFL’s case, a company sale was the chosen solution.
The sale of the XFL is notable for multiple reasons. One of the buyers was Dwayne “The Rock” Johnson, a former WWE wrestler turned full-fledged movie star. He purchased the XFL with Dany Garcia, his business partner and ex-wife, as well as RedBird Capital. The purchase will also make Garcia one of the only female sports league owners. This group of investors purchased the football franchise for $15 million.
Discharging Debts In Chapter 7 Bankruptcy
It’s unlikely that Chapter 11 bankruptcy will be the best solution for you if you struggle with debt. The most popular type of consumer bankruptcy is Chapter 7 bankruptcy. This option is also available for businesses, but any business that files Chapter 7 bankruptcy is required to permanently shut down.
So why is Chapter 7 bankruptcy the most popular type of bankruptcy? It offers immense benefits for those who meet all of the qualifications. Almost all types of unsecured debts will be discharged in a Chapter 7 bankruptcy. Credit cards, medical bills, personal loans, and more will be wiped away in a process that generally takes four to six months. While waiting for the case to be finalized, you will be protected from your creditors by the automatic stay.
There are strict criteria to keep people who can afford to pay their debts from abusing the benefits of Chapter 7 bankruptcy. Many people are disqualified from Chapter 7 bankruptcy due to their income. You must either make less than your state median income or pass an income test known as the Means Test to qualify. You must also have not filed bankruptcy too recently- you must wait 8 years to file Chapter 7 bankruptcy again after discharging your debts in Chapter 7 bankruptcy a first time. Lastly, your property may not be protected in a Chapter 7 bankruptcy. All of your assets must be protected by your state’s bankruptcy exemptions, or else the trustee may opt to seize them, sell them, and pay off your bankruptcy estate with the proceeds.
Paying Your Creditors In Chapter 13 Bankruptcy, In Comparison To XFL Players
The second most popular type of consumer bankruptcy is Chapter 13 bankruptcy. While this type of bankruptcy offers several unique advantages, it is often used by those who have too high of income to qualify for Chapter 7, or have assets that aren’t protected by exemptions that they want to protect. Chapter 13 bankruptcy reorganizes debts into a payment plan. This payment plan will last 3 years for those who make less than the state median income, and 5 years for those who make more than that amount. Like in a Chapter 7 bankruptcy, the Automatic Stay will be active the whole while, protecting the debtor from wage garnishments, vehicle repossessions, and more.
Debts are paid in order of four categories in a Chapter 13 bankruptcy. The first debts paid in a Chapter 13 payment plan are legal fees associated with the bankruptcy- trustee’s fees, attorney’s fees, etc. The next category paid is secured debts, or any loan with a piece of property attached as collateral. The third category of debts paid is priority debts. Lastly, unsecured debts, or those that would be discharged in Chapter 7 bankruptcy, are paid in a Chapter 13 payment plan. The fourth category of debts need not be paid in full to be discharged in Chapter 13. Rather, the amount that will be paid off will be based on the amount of disposable monthly income you have available, which is calculated using the Means Test. So it’s definitely possible that many of your creditors would receive far more than the XFL players’ average of $600 in your bankruptcy plan.
Contact An Experienced Bankruptcy Law Firm In Las Vegas
Whether you’re a professional football player or work a 9 to 5, sometimes life circumstances outside of our control can create unmanageable debt. If this happens to you, you should consider bankruptcy as a means to address your debts. Chapter 7 or Chapter 13 bankruptcy may provide a path to a stronger financial footing and a new positive credit history. To learn more, call or use our online form to schedule your free consultation with one of our experienced Las Vegas bankruptcy attorneys today.
Las Vegas Bankruptcy Lawyers