Vick repays more than the law might have required.
NFL quarterback Michael Vick has nearly consummated his chapter 11 plan of reorganization and repaid nearly $18M to his creditors. Vick filed a chapter 11 bankruptcy on July 7, 2008, while still serving a 23-month sentence at Leavenworth Penitentiary in Kansas for his part in operating a dogfighting ring. Vick’s initial bankruptcy schedules listed assets valued at roughly $16M and liabilities totaling $20M. Ultimately, Vick’s chapter 11 plan called for the repayment of almost $18M to creditors.
While Vick could have filed a chapter 7 bankruptcy and avoided repaying the bulk of his debts, Vick decided to file a chapter 11 bankruptcy to more fully pay back his creditors. Vick is quoted as saying:
“I didn’t want to stiff people who never stiffed me. I feel blessed because I came out and found myself in a position where I had a lot of people that really believed in me, people who gave me an opportunity. At the time, it wasn’t about trying to fulfill all the bankruptcy needs. I was trying to fulfill all the needs that I had in my life because I had nothing.”
In order to pay his debts pursuant to the chapter 11 plan of reorganization, Vick adhered to a strict $300,000 yearly budget. While $300,000 per year can certainly satisfy living expenses, Vick earned nearly $50M over that same period. The bulk of his earnings were used primarily to repay creditors, and to pay taxes and professional fees.
Vick’s largest creditor was his former employer, the Atlanta Falcons. The Falcons attempted to recover $20M of bonuses paid to Vick during his time playing for the Falcons. In March 2009, while Vick was still in prison and prospects for continuing his career in the NFL remained murky at best, the Falcons settled for a $6.5M claim in the bankruptcy case. Had Vick not been able to secure lucrative NFL player contracts after his release from prison, the claim might never have been paid. The Falcons sold that $6.5M claim in March 2011 to Fulcrum Credit Partners for an undisclosed amount. Presumably Fulcrum purchased the claim at a discount.
After Vick consummates his bankruptcy plan, he intends to continue to live less extravagantly than he did prior to his incarceration. He does, however, plan to buy some cars. Vick said, “I’m still a car guy, so I’ll still buy cars.”
Michael Vick’s bankruptcy is an example of the rare case where a debtor paid back more to his creditors than the law may have required.