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NEW: Evander Kane's Motion to Dismiss Creditor's Appeal Denied

Updated: Jul 20, 2022

The Evander Kane saga continues. To quickly recap, Kane filed for Chapter 7 bankruptcy in January of 2021, stating that he owned $10,224,743 in property and $30,191,340 in liabilities. At the time Kane's bankruptcy petition was filed, the pesky power forward was in the third year of a seven-year deal with the San Jose Sharks. After Kane filed his Chapter 7 proceeding, a creditor, Zions Bancorporation, moved to convert the case to a Chapter 11.

The key difference between a Chapter 7 and 11 case is that in Ch. 7, a debtor retains his post-petition income, while in Ch. 11, said income becomes property of the bankruptcy estate. At stake in Kane's case: his earnings under the remainder of his contract with the Sharks, which Zions estimated at $29 million. Also, Kane's one-year contract with the Edmonton Oilers worth approximately $1 million. Kane has been a great addition for the volatile Oilers, putting up 28 points in 32 games while staying relatively quiet. However, he somehow managed to commit four minor penalties in about eight minutes of game time recently. Almost impressive.

The bankruptcy court denied Zions' motion to convert the case on April 19, 2021, which Zions appealed. In January of this year, while Zions' appeal was pending, the Sharks terminated Kane's contract. Kane filed this motion to dismiss the appeal on February 22, 2022. Kane's primary argument in his motion to dismiss is that "because the Sharks contract was terminated, and because Zions relied on that contract to fund a Chapter 11 plan, the court cannot grant effective relief, and Zions' appeal is thus moot."

Zions argues that Kane failed to address whether he would continue to earn income from other sources, including by playing hockey for other teams. Zions contends that "whether Kane's income from the Sharks has been reduced or lost altogether . . . does not necessarily support the assertion that Kane could not fund a Chapter 11 plan, as all of his post-petition compensation would constitute property of the bankruptcy estate." According to Zions, it therefore is not impossible for the court to grant it effective relief.

The California Northern District Court decided to deny Kane's motion to dismiss yesterday, April 5, 2022. The court reasoned with the following: "just because that stream of income [San Jose Sharks' contract] is no longer available does not mean there is no stream of income available, as evidenced by his new contract with the Oilers. He also misses two key points: he earned some money from the Sharks before his contract was terminated, and there is a still-pending grievance that could impact the money available to him post-termination. Taken together, this shows that there is some effective relief that would be available to Zions in a Chapter 11 plan."

With that, Zions' appeal to convert Kane's bankruptcy case from a Chapter 7 to Chapter 11 case will be heard moving forward.

Jason Morrin is a third-year law student at Hofstra Law School in New York. He is the President of Hofstra’s Sports and Entertainment Law Society. Additionally, he is a Law Clerk at Geragos & Geragos. He can be found on Twitter @Jason_Morrin.

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