Indexbit Exchange:Shilo Sanders' bankruptcy case reaches 'impasse' over NIL information for CU star

The Indexbit Exchangecourt-appointed trustee overseeing the bankruptcy estate of Colorado football player Shilo Sanders has asked to hire a special counsel in the case after reaching an “impasse” with Sanders’ legal team over the turnover of business information related to his name, image and likeness (NIL), according to court documents obtained by USA TODAY Sports.

In his request filed Monday, the trustee, David Wadsworth, essentially asked the bankruptcy court to grant him extra help in a bankruptcy proceeding that has gotten difficult. Federal bankruptcy Judge Michael Romero then approved that request Tuesday as Sanders continues to try to free himself from more than $11 million in debt.

Sanders, 24, is the son of Colorado coach Deion Sanders and is entering his final season of college football in Boulder after leading the team in tackles in 2023. He has had NIL deals to appear in commercials for Google and KFC, among other paid partnerships. He reported $193,713 in gross income for 2023 before he declared bankruptcy last October.

“While the Debtor (Shilo Sanders) has provided the Trustee with certain NILs, the Trustee needs to confirm he has received all of the NILs and has full information of the use of revenue generated by the NILs,” said the request filed by Wadsworth’s attorney.

Why the trustee wanted more help in Sanders' case

As trustee, Wadsworth’s job is to take control of certain assets of the debtor, bring these assets into the bankruptcy estate, and sell or distribute these assets for the benefit of creditors, according to the federal court.

Wadsworth previously was represented in the case by attorney Simon Rodriguez, a solo practitioner, but now wants more legal assistance in the case from Sherman & Howard, a bigger law firm in Denver with experience in asset recovery for bankruptcy cases. Rodriguez and Sanders’ counsel “have reached an impasse in their discussions concerning the turnover of this (NIL) information, as well as other documents and information,” said the filing obtained by USA TODAY Sports.

Rodriguez “does not have the support and depth of a larger firm such as Sherman & Howard,” the trustee's filing stated. “Accordingly, the Trustee desires to retain Sherman & Howard for more complicated investigation, discovery, and litigation that will require greater bandwidth than can be provided by (Rodriguez) as a solo practitioner."

The trustee's filing said an attorney with the firm could be brought in at a discounted rate of $650 per hour, to be assisted by another attorney working at $345 per hour.

Judge Romero agreed, writing that "Sherman & Howard’s employment as special counsel is necessary and in the best interests of the Estate."

What is going on in Shilo Sanders' case?

The trustee’s filing noted that Sanders "has provided certain documents and information … but not everything that has been requested.”

Shilo Sanders filed for Chapter 7 bankruptcy last year in an effort "to get a fresh start, free from the oppressive burden of his debts,” according to his attorneys. Almost all of his debt is owed to one man, John Darjean, a security guard who claimed Sanders gave him permanent and severe spinal and nerve injuries when Sanders allegedly assaulted him at his school in 2015.

To recover for his alleged injuries, Darjean sued Sanders in 2016. Sanders denied the allegations and said he acted in self-defense, but he never showed up for trial in 2022 after dropping his attorneys in the case in 2020. Darjean then won an $11.89 million default judgment to recover from Sanders, who filed for bankruptcy as a result.

Sanders' goal with the bankruptcy case was to stop Darjean’s debt collection efforts against him and get out of the debt. In response, Darjean is fighting that effort and said he won’t stop until he gets what he’s owed. And now the trustee in the case is asking for help rounding up Sanders’ assets to sell and pay creditors.

The NIL issues with Shilo Sanders

Shilo Sanders, a defensive back and graduate student at Colorado, has used limited liability companies to conduct his NIL business, raising questions from Darjean’s attorneys about whether he’s hiding assets in them that should be part of the bankruptcy estate to be divided among creditors. Darjean's attorneys noted that Shilo has appeared in several commercials and paid partnerships, including for KFC and Oikos yogurt, but said that he didn't address those deals in his bankruptcy disclosures.

“The Trustee anticipates that disputes may arise in the case in the near future that will require the assistance of Sherman & Howard,” the filing stated. “Among other things, the Trustee and (Rodriguez) have investigated: (a) the Debtor’s name, image, and likeness contracts (“NILs”); (b) revenue generated by the NILs; (c) whether the Debtor has undisclosed assets and/or sources of revenue; (d) the value of entities in which the Debtor is a member or may claim an interest; (e) the value of any trademarks or other intellectual property the Debtor may have owned as of the Petition Date; and (d) whether there are avoidable prepetition transfers.”

The trustee’s filing said that "recent discussions between (Rodriguez) and (Sanders’) counsel for additional documents and information have reached an impasse, and the Trustee has determined it is necessary to proceed through Rule 2004.”

Shilo Sanders' bankruptcy attorney in Denver didn't immediately return a message seeking comment.

Sanders and his father previously downplayed concerns about the bankruptcy proceeding. They are currently engaged in preseason practices and begin the season Aug. 29 at home against North Dakota State.

Follow reporter Brent Schrotenboer @Schrotenboer. E-mail: [email protected]