Bernie Kosar Forced to File Chapter 7 Bankruptcy

Former Cleveland Browns quarterback Bernie Kosar is calling a bankruptcy audible.

The former NFL star originally filed for Chapter 11 bankruptcy in June of 2009 with the hopes of reorganizing his personal and business debts.

Now, BusinessWeek is reporting that after pressure from Kosar’s ex-wife, Babette Kosar, and her attorney, he will now be filing Chapter 7 bankruptcy.

Bernie and Babette divorced in 2007, and Babette says she is still waiting on money awarded to her in the settlement.

Florida Judge Raymond B Ray agreed to the request and appointed Robert Furr to change the Chapter 11 to a chapter 7 bankruptcy. Furr will now be in charge of selling Kosar’s assets and distributing the proceeds to his creditors, including his ex-wife.

Furr wrote in the bankruptcy papers that Kosar has no reason to file Chapter 11. He doesn’t have any business prospects and he owes $105,000 in child support alone. He had owned a steakhouse but that business closed down in 2009.

The trustee said Kosar owed too much money to simply reorganize his debt, and the Chapter 7 will be a more efficient means to settle his debts. Judge Ray changed Kosar’s bankruptcy case into liquidation after receiving his trustee’s request.

Under the Chapter 7 bankruptcy Furr will sell Kosar’s assets and pay his creditors with the proceeds from the sales. Kosar listed his assets at $9.2 million and $18.9 million in debt in the bankruptcy papers.

Kosar’s creditors include the Cleveland Browns ($1.5 million), Babette Kosar ($3 million), arena football team the Cleveland Gladiators ($725,000) and a couple of banks in Florida that backed real estate ventures that did not quite pay off ($9 million).

Prior to the Chapter 7 conversion, Kosar had what is known as a hybrid bankruptcy plan. The goal of this plan was to allow him to keep some of his valuable assets while still satisfying his creditors.

For example, Kosar would sell some of his company’s assets, including six percent interest in the national hockey team The Florida Panthers. These assets were valued at $14.4 million. In return Kosar would get to keep his NFL pension and vehicle.

But now that he filed Chapter 7 – all of his non-exempt assets could be sold to satisfy his debts.

Alan J. Perlman,  Babette Kosar’s attorney said that with the trustee running the Chapter 7- his client should be awarded her divorce settlement.