When San Jose Sharks forward Evander Kane filed for bankruptcy in January, just before the start of the season, there was some concern that he would not be available to play in 2020-21. While that has not been the case, a new question has arisen in relation to Kane’s bankruptcy case and his playing future: Is this his final season with San Jose?
The Athletic’s Daniel Kaplan and Kevin Kurz reported on Wednesday that Kane, along with the Sharks, filed a motion in United States federal bankruptcy court requesting an extension on the court’s determination as to how Kane’s contract is governed by bankruptcy law and whether it should be assumed as part of reorganization. Their reasoning: As the parties to the contract, they each acknowledge a possibility of rejection of the deal, making the determination a moot point. The court has accepted this motion, delaying the case until June 7. For a San Jose team that is highly unlikely to make the 2021 playoffs, this date falls after the season is over, at which time the two sides could decide to terminate the remaining four years and $29M of the $49M pact that Kane signed in 2018.
Why exactly does either side wish to terminate the deal? After all, Kane is the Sharks’ second-best scorer so far this season and a perennial 30-goal, 50-point player who is well worth his value. Kaplan and Kurz posit that for both sides this is simply about saving money in the short term. While that may seem counterintuitive for Kane to give up so much guaranteed money, not only is the contract filed as his sole source of employment in his bankruptcy filing, but it was also used to secure many of the loans that he has defaulted on. Removal of the money promised in his contract would fundamentally change the way that his bankruptcy ruling would be organized, denying creditors of their immediate source of repayment. Essentially, the contract is all that Kane has, and by removing it before his bankruptcy determination, the result would be very different. As for the Sharks, they're happy with the play of Kane, but as they endure another difficult season and consider a rebuild, $29M in future salary could be put to better use in a time of financial hardship.
Of course, Kane’s creditors also want a say in the matter. One in particular, Zions Bancorp, has filed a motion requesting that Kane’s bankruptcy case be treated as a business under Chapter 11 rather than as an individual under Chapter 7. They claim that Kane’s losses, mostly attributed to gambling, should be considered business-related. If this change is made, with a hearing occurring later this month, then the $29M remaining on Kane’s contract would be open to creditors and a lien would be placed on those future earnings. In this case, there would be even more motivation for Kane to terminate the deal. If the contract remains shielded from creditor access, then it is more likely to be honored by Kane and Sharks, especially in the event of a positive decision from the judge on how it should be treated.
The NHL and NHLPA are certainly watching this case closely as well, but as Kaplan and Kurz note, there is not much that they can do when it comes to competing with federal law. If the Sharks and Kane decide to terminate the contract in the eyes of the bankruptcy court, that would supersede any collectively bargained rules and processes. However, if this does occur, the league and players’ association could certainly step in to prevent Kane from signing a new deal with San Jose — or with any other team — after his bankruptcy decision has been finalized. Kane is no stranger to off-ice issues, and the league might not want to further enable him and set a precedent that its rules can be warped when players get into personal trouble.
There is still much to be decided in this case, but this is now the second time that Kane’s bankruptcy case has come up as a possible hindrance to his participation in the NHL, and it likely won’t be the last. With the Sharks now involved, this situation has been elevated from an individual issue to one that could affect the team, the league and players’ rights. The case bears watching in the coming months.