Aug. 31 (Bloomberg) -- Michael Vick’s $100 million contract will provide the Pro Bowl quarterback with enough money to reimburse his creditors by 2014, Vick’s financial adviser and bankruptcy trustee said.
“It’s a beautiful thing,” Joseph Luzinski, the trustee overseeing Vick’s bankruptcy plan, said yesterday in a telephone interview. “It should put sufficient monies in the pot to substantially clean up all of the claims.”
Luzinski, a court-appointed restructuring attorney with Development Specialists Inc. in Miami, said the bankruptcy payout plan implemented in 2009 was based on Vick receiving a large contract in the future.
“That was the hope of the creditors that it would work out this way,” Luzinski said. “And short of there being some dramatic change -- there’s no lockout, no injuries -- and no other issues, it should be a workable format to clean up his past financial commitments.”
Vick agreed on a six-year contract with the Philadelphia Eagles that places him among the National Football League’s highest-paid players just over two years after he left prison, where he was serving a sentence for involvement in a dogfighting ring.
$40 Million Guaranteed
The deal is worth $100 million and guarantees the 31-year- old Vick about $40 million, Ira Spiegel, Vick’s financial adviser, said in a telephone interview. The Eagles, who begin the regular season Sept. 11 at the St. Louis Rams, didn’t disclose financial terms in a statement.
“It will be a relief to be done with this and be done with the bankruptcy plan early,” Spiegel said. “Michael’s plan going forward is to ensure that when he is done playing he doesn’t have anything to worry about.”
Under the contract, Vick would make about $16 million a season. Unsecured creditors stand to receive about $5.2 million a year from that contract. Vick owed creditors about $20 million and has paid off a “couple million,” Luzinski said.
“So far, it has been fairly minimal,” Luzinski said.
Under the restructuring plan, unsecured creditors, including Vick’s agent, Joel Segal, will be paid from a liquidating trust funded by his future income for up to six years, according to court documents. Other unsecured creditors that will share Vick’s future income include the Atlanta Falcons, with a $6.5 million claim; Royal Bank of Canada, owed about $2.6 million; and Wachovia Bank NA, holding a $1.1 million claim.
Vick, who played with the Falcons from 2001 to 2006, found himself in a court battle with his old team over almost $20 million in bonus payments from a 2004 contract that made him then the highest-paid player. He settled with the Falcons, reducing the claims to about $6.5 million. The banks’ claims relate to financing guarantees Vick made for a variety of businesses, including a rental-car franchise and a liquor store, court filings show.
Vick will have a living expense allowance of $300,000 a year, according to court papers. Those expenses include food and rent, but not payments to agents and other unexpected expenses, Spiegel said.
“The philosophy behind that is the guy needs a little something to live on,” Luzinski said.
The distributions vary between 10 percent and 40 percent of Vick’s adjusted gross income, escalating as he earns more money. Creditors will receive 40 percent of yearly adjusted gross income over $10 million. A provision is included if Vick signs a new contract in the final year of the six-year payment period and creditors haven’t received at least 80 percent of what they’re owed, that will allow them to recoup from the new contract.
Vick was the NFL’s top-paid player with a 10-year, $130 million contract in Atlanta before his role in the interstate dogfighting ring landed him in jail for 18 months.
He was described as “cruel and reprehensible” by NFL Commissioner Roger Goodell for participating in a ring in which dogs that lost fights were drowned, hanged, shot or electrocuted. In April 2007, he took part in the killing of eight animals, one of which was dispatched by slamming it into the ground, his criminal indictment said.
Vick said yesterday he has changed many facets of his life, and called the contract and the chance to play in the NFL again a “blessing.”
“I’m appreciative of where I’m at,” Vick said in a televised press conference in Philadelphia. “Kids should know that you should never count yourself out, but at the same time, don’t put yourself in a position where you have to make a miraculous comeback.”
He signed with the Eagles in August 2009 and last year was named the NFL’s Comeback Player of the Year after taking over as the starter and accounting for 30 touchdowns in 12 games. He finished second to Tom Brady of the New England Patriots in NFL Most Valuable Player voting.
Vick said he now has his sights on a Super Bowl title.
“As a competitor, I don’t feel like my career will be complete without it,” he said.
The Eagles designated Vick as their franchise player before the lockout, which ended when the league its players reached a collective-bargaining agreement in July, and had until Sept. 20 to sign him to a multiyear contract.
Vick’s initial contract with the Eagles was worth $1.6 million with an option for the second year at $5.2 million, FoxSports.com reported at the time.
Under Vick’s restructuring plan, assets are divided into two groups, “plan assets” and “trust assets,” to repay secured and unsecured creditors respectively, according to court documents. Plan assets consist of homes, real estate, boats, vehicles, horses and other tangible property that can be sold. Vick owned nine cars, four boats and owned or held interests in at least 20 companies, court papers show. The trust assets include portions of his future income and a home in Suffolk, Virginia.
Vick was allowed to keep a home in Hampton, Virginia, a 2007 Infiniti truck, a pension plan and personal property such as clothing and furniture, as part of the plan.
The case is: In re Michael D. Vick, 08-50775, U.S. Bankruptcy Court, Eastern District of Virginia (Newport News).
--With assistance from Erik Matuszewski and Aaron Kuriloff in New York, Dex McLuskey in Dallas and Jef Feeley in Wilmington, Delaware. Editors: Larry Siddons, John Pickering
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