This is all too sad and common a tale. It’s the story of Antoine Walker (aka Employee Number 8), a former NBA player who earned over $108 million dollars during his professional playing career. Now he’s bankrupt. He claims a failed real estate venture did him in. To an extent, it did. Real estate holding companies are risky. He apparently got caught when the bubble burst. Still, operating as an ATM to his friends and family, as he claims, is the likelier culprit. It’s hard to have sympathy when most of the clients of www.kinglawcenter.com didn’t make bad money choices; they just lost work, went on disability, retired, had an unexpected medical expense, etc. Still, this kind of thing happens, despite there being numerous league-sponsored seminars and the existence of many support personnel to help young athletes manage their new-found riches. Locally, Allen Iverson is reportedly in financial trouble despite making loads of money during his 76ers career. It’s a sad story and one that’s too often told, but it’s hard to have sympathy for bad decision-making when I all too often see good folks making good decisions still end up needing a bankruptcy. Here’s to hoping you land on your feet, though, Antoine.
Here’s a fun read. Well, maybe not. It is government guidance provided to guarantors and educational institutions participating in the FFELP and Perkins programs regarding student loan discharge in bankruptcy. It details whether the the Department of Education will consent (or not object) to a borrower’s claim of undue hardship (which is the well-known Brunner standard that courts employ to discern the dischargeability of qualified student loan debt). The formula is partially about the fees and costs to defending the litigation. In some sense, this offers backdoor guidance to lawyers about whether to bring a Brunner challenge, assuming the lawyers can correctly predict the government’s calculations. The win here is that the government is talking about this; it’s out there for discussion finally. The national horror that is student loan debt amidst the lack of growing wages for the educated might have a light at the end of the tunnel (some day; maybe this is a beginning).
…because Rico means “rich” in Spanish. Currently, the island territory is paying upwards of 70% of it’s economic output to servicing debt. Ouch. While some options to negotiate with creditors remain, Puerto Rico is not permitted, by law, to file for bankruptcy — which would be a Chapter 9, like Detroit — due to its status as a territory and not an independent sovereign/municipality. Bankruptcy in this context could be very helpful, if only as a means of leverage in negotiations with creditors. Indeed, I believe that the threat of bankruptcy will likely lead to a win-win situation: a win for Puerto Rico in that it would be allowed to mitigate its debt issues, at least in the short term; and a win for creditors in that they’d likely not have to swallow as poison a pill as might be forced upon them through a Chapter 9 filing. Hopefully, Congress will act. It seems a bit overlord-like to, at once, keep Puerto Rico as a territory (neither a state nor an independent nation-state) while not offering it some of the most basic protections afforded all Americans. Consider, for instance, that one doesn’t even need to be a US citizen to file a Chapter 7, as it is the debt (i.e., whether it is owed to an American entity) that defines whether jurisdiction, and the ultimate discharge, is applicable. So, buenas suerte, amigos. I hope you become empowered with the right to file.