Kane’s deal – a seven-year, $49m deal signed in 2018 with $29m remaining, according to court documents – has been used to help secure several loans for the winger. But in January, Kane filed for chapter 7 bankruptcylisting debts of $26.8 million and assets of $10.2 million.
The deadline to move to reject his contract with the Sharks was this week, but a bankruptcy judge has granted Kane and the Sharks’ request to extend it by 90 days, until June 7. Given the June deadline set by the judge, Kane is likely to finish the season with the Sharks.
Several creditors, including Zions Bancorp, are hoping to upgrade Chapter 7 bankruptcy (for individuals) to Chapter 11 (for businesses). The change would be significant because, under Chapter 11, the $29 million cited by lenders as remaining on Kane’s contract would be available to creditors like Zions, which owes $4.25 million. It wouldn’t be under Chapter 7, according to Zions, who argues Kane’s losses are business-related.
A hearing on that request is scheduled for this month. If Kane’s contract is protected from creditors under Chapter 7 but not 11, the extension until June allows him and the Sharks to decide, based on the judge’s ruling, what to do with his contract. If the deal converts to Chapter 11, Kane and the Sharks would have greater motivation to reject the contract.
Why would Kane consider giving up his lucrative contract? The creditor’s source said it was unclear, but given the vitriol emerging between the parties, Kane may want to deprive the creditors of their primary source of financial redress. Athlete bankruptcies are not uncommon, but the already evident bitter friction between Kane and creditors is.
A similar question is, why would the Sharks, who are not bankrupt, sign this week’s motion? Could the team see this as a way out of an expensive contract as financial losses mount due to the pandemic?
Attorneys for Kane and the Sharks, who are represented by Foley & Lardner, did not respond to requests for comment. A Sharks spokesperson declined to comment.
Kane is the Sharks’ second-leading scorer with 20 points (nine goals, 11 assists) in 23 games this season.
Read it full story of Athleticism Dan Kaplan and Kevin Kurz in the Go Further section below.