Bankruptcy Might Make Ricky Williams a Free Agent
Ricky Williams could gain free agency if he files for bankruptcy (Fort Worth Star-Telegram)
The Dolphins might win the right to collect $8.6 million from retired running back Ricky Williams, but lose the rights to him in the process. A Miami bankruptcy attorney and a former agent both said Thursday that if Williams were to file bankruptcy he could become a free agent, and the Dolphins could end up with nothing from Williams but a small percentage of the $8.6 million the Dolphins are seeking. Miami would be unable to keep him on the team or even trade him in the future. Miami attorney Jim Fierberg went so far as to call the strategy “brilliant.” “It’s a pretty fascinating way for him to get free agency,” Fierberg said. “I like that idea, but it’s not without risk.”
Scott Helfand, a former agent who once represented Dolphins punter Reggie Roby, went so far as to suggest the idea to Bruce Tollner, one of Williams’ agents. “I talked to Bruce Wednesday night and, when I told him, he was shocked,” said Helfand, who used the idea of a bankruptcy filing in 1993 to encourage the Dolphins to cut Roby. “He said he was going to call the NFL Players Association right away.”
In the 1993 Roby situation, at least one member of the Dolphins’ front office wanted to fight Roby in bankruptcy court. But after doing research, coach Don Shula decided to waive Roby. Helfand, who teammed with former agent Randy Kaspar to develop the strategy, said the Dolphins “freaked” when he and Kaspar approached them about releasing or trading Roby because filing for bankruptcy was an option for them. “From what I understand, they got on the phone with the NFL right away and it was a concern league-wide because it would obviously be a bad precedent for the league,” he said.
NFL Management Council attorney Dennis Curran declined to comment Thursday, but another source said “the NFL would obviously fight such an attempt,” and it would be terrified of other players filing bankruptcy to get out of contracts. Fierberg, who has worked on bankruptcy filings involving former NFL cornerback Dale Carter and former Dolphins receiver Tony Martin, said the league likely would lose. Fierberg noted the 1990 bankruptcy filing of singer James Taylor, who had a contract with Polygram Records dissolved by the court. Although a bankruptcy court can disallow a filing if it’s not in “good faith,” NFL contract rules would not supercede bankruptcy law. “Bankruptcy law and the Constitution predates the NFL and even the Green Bay Packers,” he said.
While I oppose the very idea of bankruptcy law as a matter of principle, I understand the basic rationale behind it. I don’t understand why it would allow someone to get out of a personal services contract. It makes sense that one would be able to get out of a contract that required the expenditure of money–say, if the Dolphins went bankrupt, they wouldn’t be obligated to pay a player contract–but why would an employee be released from an employment contract? Being bankrupt doesn’t impinge on one’s ability to go to work.
Under the Bankruptcy Rules the Debtor (or Trustee as the case may be) has the ability to repudiate any contracts that require future performance. The idea is that a Debtor shouldn’t be forced to complete contracts that have the affect of depleting Debtor’s assets (and thus the amount that Creditors can collect). Considering the underlying bankruptcy principle of effectively freezing assets (and the claims to them) so that a Debtor doesn’t favor some Creditors over others, the repudiation of contracts that may deprive the Creditors of their fair claims seems pretty reasonable.
You oppose bankruptcy law on principle? What’s your alternative? Debtor’s prisons?
James – why do you “oppose the very idea of ban(k)ruptcy law”?
I don’t see why deadbeats should be able to steal money from people who dealt with them in good faith. I don’t mind some provision that allows sanctuary for those who have fallen on hard times, but think it should take the form of extending the payback period rather than quashing legitimate debts altogether.
I donÃ¢Â€Â™t mind some provision that allows sanctuary for those who have fallen on hard times, but think it should take the form of extending the payback period rather than quashing legitimate debts altogether.
That is, essentially, what bankruptcy does. Legitimate debt is paid off (albeit at a reduced price) not “quashed altogether.”
The societal payoff from bankruptcy laws is that since credit is more readily available greater risks are taken. The greater risks leads to greater rewards (e.g., better technology; higher productivity; lower prices; etc.) and thus more opportunities for all. The alternative is for creditors to demand security for loans (in the form of collateral), thus only those who are the lowest risk of defaulting and leaving the creditors high n’ dry will be able to receive loans. Such a system reduces the amount of choice for everyone.
Bankruptcy law is a net plus for society for many, many reasons. The strawman characterization you have made of it here as “deadbeats should be able to steal money from people who dealt with them in good faith” is not at all accurate or fair.
I thought the reason Ricky retired, however, was because he was opposed to the NFL drug testin’ policies wherein they impinged upon his Rastafarian lifestyle. As such, I ‘spect he really ain’t got any interest in free agency. However, I can see the point of usin’ bankruptcy in an effort to discharge any need for repayment to the Dolphins of his signin’ bonus or to defeat any attempts which might compel him to abide by his long-term contract. I too am fundamentally opposed to some bankruptcy scenarios, but also share the opinion that it is a necessary evil in a capitalist society. The Libertarian in me wants his push to get the NFL out of the drug testin’ business to succeed.