On June 25, Philip Sheng was featured in the Business of College Sports blog for the article “Athletes: Read This Before Selling Your House Settlement Back Pay Claim.” The following is an excerpt:
It was brought to my attention last week that a company (identified as Phoenix TF LLC in its contract) is offering to buy the back pay claims athletes have under the House settlement in exchange for receiving cash now. I have reviewed a copy of the contract and sent it to a half dozen or so of my fellow attorneys.
Potential Issues With the Contract
Attorney Philip Sheng, a partner at Venable LLP, pointed out a number of issues he spotted in the contract.
First, if/when payments begin coming to you under the settlement, you have just two business days to transfer the money to the company who purchased your claim. If it takes you longer, interest begins to accrue at 12% per annum. That’s not a lot of time.
Second, there’s what is called a “liquidated damages clause” that requires the athlete to repay the entire amount they receive from the company if they breach the contract (meaning you didn’t do what the contract said you would), and don’t fix it within five days of hearing from the company, or if one of the things you agreed to in Section 2.2 (Representations and Warranties) is later found to be inaccurate or incorrect.
If an Appeal is Successful
Sheng also points out that there is no language in the contract that covers what happens if the settlement is reversed on appeal or if your payout is either reduced or increased. Presumably, the company is taking on the risk of any reduction, but you shouldn’t ever presume anything—it should always be in writing.
Click here for the article.