A federal bankruptcy judge has ruled that a lawsuit tied to Shilo Sanders’ finances will continue in court.
Judge Michael Romero denied Sanders’ request to dismiss a complaint filed by the trustee managing the former Colorado safety’s bankruptcy case, according to USA Today. The ruling allows the legal challenge to proceed and possibly reach trial as Sanders works through a broader effort to address millions in debt.
In the written decision issued March 4, Romero explained that the court was not responsible for weighing evidence at this stage of the case.
“The Court’s role in deciding the Motion to Dismiss is not to resolve factual disputes or weigh potential evidence outside the four corners of the Complaint,” Romero wrote in the ruling.
He added that the trustee “has otherwise sufficiently pled the necessary elements of his claims,” referencing allegations related to Sanders’ bank accounts, deposits connected to his name, image, and likeness earnings, and his role in two companies tied to that income.
The dispute focuses on roughly $250,000 the trustee claims Sanders transferred after filing for Chapter 7 bankruptcy in October 2023. Court documents state that some of the money moved through businesses Sanders created, including Big 21 and Headache Gang, which handled NIL-related earnings during his college football career.
Sanders’ attorney, Keri Riley, argued that the funds should not be included in the bankruptcy estate because they represent “post-petition earnings,” meaning money earned after the bankruptcy filing.
However, the trustee disputes that position and argues the income may be connected to agreements or work that occurred before the bankruptcy case began.
Judge Romero said the issue cannot be resolved without reviewing additional evidence.
“Identifying the true nature of the funds will require presenting evidence and resolving numerous factual issues,” he wrote.
The trustee’s lawsuit is only one piece of Sanders’ larger bankruptcy proceedings. Sanders filed for bankruptcy in 2023 while seeking to discharge more than $11 million in debt tied largely to a 2022 default judgment from a lawsuit brought by Dallas security guard John Darjean.
Darjean alleged Sanders caused serious injuries during a 2015 incident when Sanders was a teenager. Sanders previously argued he acted in self-defense but did not appear at the 2022 trial, which resulted in an $11.89 million judgment.
A separate trial scheduled for August 31 will determine whether that judgment can legally be eliminated through bankruptcy.
