A month ago, Michael Johnson’s Grand Slam Track jolted its vendors with letters from insolvency firm Levene, Neale, Bender, Yoo & Golubchik LLP, warning they’d have to accept just 50% of what they’re owed or brace for a bankruptcy filing. Some agreed, many didn’t, and now the league is staring down an all-but-certain collapse.

The real blow, however, may fall on the athletes like Gabby Thomas, Josh Kerr, and many others, who stand to lose the most under the U.S. bankruptcy code.

According to league administrators, athletes have so far received only half of their owed payments. Major stars like Josh Kerr, Gabby Thomas, Kenny Bednarek, and Sydney McLaughlin-Levrone are still missing prize money that reaches into the hundreds of thousands.

But there’s a bigger concern: if the league ultimately files for bankruptcy, the organization could be obligated to reclaim even the partial payments already issued to the athletes.

Let’s talk numbers. Sydney McLaughlin-Levrone earned $250,000, Gabby Thomas $180,000, Melissa Jefferson-Wooden $300,000, Kenny Bednarek $300,000, and Josh Kerr $160,000, along with several other athletes who received similar payouts. Each athlete was paid half of their owed amount, including show money. With the league now facing possible bankruptcy, they may be required to return the money already paid.

How? Under Section 547 of the U.S. Bankruptcy Code, a bankruptcy trustee can claw back any payments the debtor made to creditors within 90 days before filing.

Classified as preferential transfers under U.S. bankruptcy law, this provides the debtors “prefer” one creditor over another in the weeks leading up to insolvency. Here, the athletes who have received payments from the league might be considered as preferred ahead of vendors who are still awaiting their dues.

If the league files for bankruptcy, the prize money already paid to the athletes can be taken back under U.S. bankruptcy law. That reclaimed money is then placed into a single pool and redistributed equally among all creditors, not just the athletes, but also the vendors and anyone else the league still owes.

The league promised US$100,000 as prize money to the winners, which caught the attention of many as it rivaled the World Athletics Championships and Olympics.

However, reality hit Michael Johnson hard after the Kingston event when the poor reception pulled many investors away from the event, and since then, the league has been facing financial issues. The athletes’ patience is running out, especially with several now admitting they saw the collapse coming even before the league’s first event took place.

Grand Slam Track fiasco! Gabby Thomas and others voice their opinion

“I’ve started companies, and I’ve made them successful, and I’ve sold them. Not a single one of them was profitable in Year 1.” That’s what Michael Johnson confidently stated before launching Grand Slam Track. But just three months later, the league collapsed under mounting financial issues. By July, when the league was already feeling the heat from athletes and vendors over missed payments, GST was still busy promoting itself on social media.

In one of their TikTok posts, Gabby Thomas jumped into the comments and pleaded, “So dope! pls pay me…” That was not all, when the league collapsed under the weight of crushing financial difficulties, Alexis Ohanian explained, “No one is celebrating this…..No one wants to see less investment in the sport.”

Even 200m world champion Noah Lyles, who had warned from day one that the league could run into trouble, voiced his frustration after the collapse, “I’d say my predictions were kind of dead on, unfortunately.”

Back in October, when Ohanian was asked whether he’d extend a helping hand to Michael Johnson during these turbulent times, the Reddit co-founder said that if he were in Johnson’s position, he would’ve simply picked up the phone and made the call. However, acquiring Grand Slam Track is not as easy as it sounds, he said.

“You’re not just acquiring, you know, the brand or the contracts, whatever the assets that they have at Grand Slam. You’re also bringing in the culture. And you’re bringing in the team. And I don’t know anything. I don’t know anything about the team. I don’t know anything about the culture.”

With World Athletics demanding full payments for the athletes and vendors rejecting the clause, the league is out of room. At this point, Michael Johnson with very few options. Given that, what do you think is next for the league?