Assets of $5.5 million, liabilities of $24.7 million
Mark Brunell, a Jacksonville Jaguars quarterback for the team’s first nine seasons and one of the NFL franchise’s most recognized and accomplished players, filed Friday night to reorganize his debts under Chapter 11 of the U.S. Bankruptcy Code.
“Deciding to do it is the hardest part,” his bankruptcy attorney, Robert Wilcox, said Friday after the filing, which was made electronically to the U.S. Bankruptcy Court Middle District of Florida.
Wilcox said Sunday that a plan of reorganization should be filed in 30 to 60 days.
The 63-page petition document shows that Brunell, most recently with New Orleans Saints 2010 Super Bowl champs, filed as an individual and states that his debts are primarily business debts. Chapter 11 is typically used by corporations, although individuals with higher levels of assets and liabilities filed under the chapter.
Brunell listed assets of $5.5 million and liabilities of $24.7 million.
The majority of the liabilities are related to real estate and business investments and Brunell’s personal guaranty on real estate debt, including debt incurred with partnerships that involved former Jaguars teammates Joel Smeenge and Todd Fordham.
Brunell issued a statement through his attorney, Michael Freed of Brennan, Manna & Diamond, Thursday evening about the debts and his decision to seek Chapter 11 protection.
“After much deliberation and many years of shouldering an enormous amount of debt resulting from passive real estate investments, it has become clear that this is the only viable course of action,” said Brunell.
He said he had been a silent partner of a group of friends engaged in real estate development with investments in Florida and elsewhere. “The timing of the group’s real estate acquisitions at the height of the real estate market, in hindsight, clearly was not good, particularly given the subsequent collapse of the economy,” he said in the statement.
Brunell said he personally made loan payments “in good faith for several years as we worked hard to find buyers, partners or refinancing. In the end, we couldn’t and I am no longer able to shoulder this burden.”
Through Wilcox, of the Wilcox Law Firm, Brunell declined to comment further about the filing on Friday.
Brunell’s assets include real and personal property, such as his Ponte Vedra Beach home valued at $3.1 million. Personal property includes checking and savings accounts, furniture, clothing, vehicles, an NFL Player 401(k) plan and belongings that include a national championship ring, three Rose Bowl rings and the 2010 Super Bowl Ring.
Under Florida law, his home, furnishings and some accounts are exempt from claims from creditors.
Brunell lives in Ponte Vedra Beach with his wife and four children. He turns 40 in September.
Brunell is a Los Angeles native and a graduate and quarterback at the University of Washington, where he played in three Rose Bowls. He was drafted by the Green Bay Packers in 1993 and spent two years with Packers before being traded to the Jaguars for its inaugural season in 1995. He was placed as a backup but took over the starting position after the regular season began.
Brunell quickly rose to become the team’s leader on the field and in the community, where he captured much community recognition and support for his views on faith and family. He became a strong supporter of area charities and created the Brunell Family Foundation in 1997 to benefit critically ill children and their families. The foundation’s website says it has raised nearly $800,000 for charity.
He was traded to the Washington Redskins in 2004 for four seasons and joined the Saints in 2008 for two seasons. He currently is a free agent.
According to the petition, Brunell lists current income at $8,780 a month between him and his wife as income from Mark Brunell Enterprises Inc. in Jacksonville. Brunell lists current monthly expenses at $24,878.945 for a net monthly deficit of $16,098.94.
Asked to describe any change in income anticipated in the coming year, he states a “possible NFL contract.”
He lists his football wages at $75,682 year-to-date from residual wages from his 2009 employment with the Saints, as well as wages of $1.6 million in 2009. He states wages of more than $2 million a year in 2007 an 2008.
According to the USA Today Salaries Database, Brunell earned a total salary of almost $52 million from 2000-2009.
Chapter 11 of the U.S. Bankruptcy Code is designed to allow debtors to reorganize debts under the protection of the court. Chapter 11 provides for an automatic stay in which judgments, collection activities, foreclosures and property repossessions are suspended and cannot be pursued by creditors on any claim arising before the filing of the petition, according to court information.
“The stay provides a breathing spell for the debtor, during which negotiations can take place to try to resolve the difficulties in the debtor’s financial situation,” according to the administrative office of the U.S. Courts.
While Brunell indicated in the petition that he “estimates that, after any exempt property is excluded and administrative expenses paid, there will be no funds available for distribution to unsecured creditors,” Wilcox said creditors will receive funds.
“He tried very hard to reach settlements with all his creditors, but at the end of the day the payments were just too much,” said Wilcox.
Brunell lists $21.15 million in unsecured nonpriority claims and almost $3.6 million in secured claims.
According to court definitions, secured debt is debt backed by a mortgage, pledge of collateral or other lien and debt for which the creditor has the right to pursue specific property upon default, such as home mortgages, auto loans and tax liens.
Unsecured claims or debts are those for which a creditor holds no special assurance for payment, such as a debt for which credit was extended based solely upon the creditor’s assessment of the debtor’s future ability to pay.
Brunell’s list of creditors holding the 20 largest unsecured claims include American Bank of Corpus Christi, Texas; CNL Bank of Jacksonville; Fifth Third Bank of Cincinnati, Ohio; Independent Bank West Michigan in Ionia, Mich.; National Retail Properties LP of Orlando; and SCBT of Orangeburg, S.C.
The petition lists five pending foreclosures or debt collections and one listed as settled but not dismissed with CNL Bank.
”The whole case is about the business problems of the real estate development companies and the related downturn that has affected every one of us,” said Wilcox.
Brunell’s Chapter 11 joins hundreds of others so far this year in the Middle District of Florida Bankruptcy filings of all chapters are on track to surpass the filings of 2005, the year before laws were changed to make it more difficult to file.
From January to May, 387 Chapter 11 petitions were filed in the district, which includes Jacksonville, Orlando and Tampa and encompasses 35 of the state’s 67 counties.
Chapter 11 filings were up 73 percent from the first five months of 2009 and were nine times the 42 in 2006.
In an interview earlier this month with the Daily Record, the president of the Jacksonville Bankruptcy Bar Association, Jerrett McConnell, said the biggest increase in filings he has seen are with corporate owners, doctors, accountants and others who were impacted by the downturn in the real estate market.
Having invested in the soaring real estate market up to the mid-2000s, they found when the market collapsed that they couldn’t find buyers or renters for their properties and found their lines of credit pulled.
Brunell listed much of his business as taking place from 2003-2010.
McConnell, a partner in Friedline and McConnell, expected the commercial real estate market to hit bottom the next six months.
Those filing in bankruptcy court, he said, “can’t keep the ball rolling.”