By: Kellen Sweeney
I. Introduction
On its surface, a climate finance firm filing for Chapter 11 bankruptcy and an NBA salary cap investigation appears unrelated. However, the bankruptcy filing of Catona Climate, formerly known as Aspiration, has forced the National Basketball Association (NBA) to investigate the salary arrangements of the Los Angeles Clippers, basketball superstar Kawhi Leonard, and the franchise’s owner Steve Ballmer, one of the richest individuals in the world.
The connection between these two stories does not lie in climate policy, nor in sport of basketball, but in the exposure of creditors and investors because of a public bankruptcy. In this case, the bankruptcy of Aspiration has opened old questions and possibly exposed whether a team sponsor was used by a NBA owner to help circumvent the league’s salary cap.
A. Aspiration’s Rise & Fall
The story begins with Aspiration, a climate finance company focused on facilitating corporate climate action by financing long-term carbon removal projects.1 Through contractual commitments for future carbon credits, Aspiration positioned itself between companies seeking to meet decarbonization goals and a portfolio of nature-based carbon removal projects.2 However, after years of heightening financial distress, loss of investor confidence, and funding disruptions created by legal and regulatory challenges3, Aspiration filed for Chapter 11 protection on March 30, 2025 in the U.S. Bankruptcy Court for the District of Delaware.4 The Debtors reported $50 million to $100 million in assets and $100 million to $500 million in liabilities.5
The bankruptcy schedule revealed an unexpected counterparty. The top unsecured creditor is the LA Clippers LLC asserting an unsecured trade payable and contracted carbon credits with a claim amount of approximately $30 million.6 However, more surprising is another significant unsecured claim of approximately $7 million held by KL2 Aspire LLC, an entity affiliated with Los Angeles Clippers Forward, Kawhi Leonard.7
Section 107(a) of the Bankruptcy Code provides that documents filed in bankruptcy court are public records open to examination.8 Chapter 11 bankruptcy requires extensive mandatory, public disclosure of a debtor’s financial affairs, assets, liabilities and business operations.9 As a result, relationships and transactions that might otherwise remain hidden as private contracts can become visible to the public. These disclosures, potentially shielded absent bankruptcy, quickly drew scrutiny beyond the bankruptcy court and onto the basketball court.
B. The Team, the Owner, & the Superstar
In August of 2014, Steve Ballmer, former CEO of Microsoft, purchased the Los Angeles Clippers for $2 billion.10 Kawhi Leonard joined the Clippers in 2019 after leading the Toronto Raptors to their first NBA Finals championship and earning his second Finals MVP honors.11
At the time of Leonard’s free agency, the NBA investigated allegations that Leonard’s uncle and business partner, Dennis Robertson, who allegedly sought improper benefits from NBA teams, including equity interests, housing, private transportation, and guaranteed off-court compensation.12 Past violations of this sort have resulted in lost draft picks and fines for teams and players.13 However, the league ultimately closed that investigation, finding no evidence that the Clippers had granted such benefits with Leonard’s contract.14
II. Bankruptcy Disclosure & Renewed Investigation
Leonard’s contract was put back in the spotlight when journalist and podcaster, Pablo Torre of Pablo Torre Finds Out saw Aspiration’s bankruptcy and examined its connections with Ballmer and Leonard.15 Aspiration’s bankruptcy disclosure forced the NBA to renew an old investigation from a different angle.
Torre reported that “Kawhi Leonard allegedly received a lucrative, no-work contract [from Aspiration] … so that he could be paid more money without it counting against the NBA’s salary rules.”16 According to Torre, who reviewed Aspiration’s internal emails and contracts with Ballmer and Leonard, said “Ballmer agreed to wire $50 million to the start-up company in September 2021, a month after Leonard signed a team-friendly, four-year, $176 million contract extension with the Clippers.”17 Weeks later, the Clippers announced a $300 million deal to have Aspiration as its team sponsor.18
In November of 2021, Leonard registered his limited liability company, KL2 Aspire LLC.19 A few months after that, Leonard signed a four-year $28 million contract with Aspiration.20 Torre reported that Leonard’s contract with Aspiration gave him “the exclusive right to control and approve all content and distribution,” while Aspiration held the right to terminate the contract “if Leonard is no longer an employee of the [Clippers] for any reason.”21
Despite these contractual obligations, Torre found “no evidence of social media posts, photographs or appearances by Leonard promoting Aspiration, as stipulated in the contract.”22 According to Torre, Leonard’s deal was meant to be a “sweetener” for his Clippers contract.23
Two years later, Leonard once again signed a team-friendly deal for about $70 million less than the maximum he could have earned.24 The potential warning signs are apparent given the prior investigation into Leonard’s contract and Ballmer’s substantial financial investments in the sponsoring company. They are further reinforced by Leonard’s lucrative endorsement agreement, which granted him broad discretion in performing his duties and remained contingent on his continued employment with the Clippers.25
A. The NBA Salary Cap Framework
These transactions are significant because the NBA operates under salary cap, which limits how much teams may spend to construct their rosters.26 In addition to a spending ceiling, the cap prohibits teams from providing players with financial benefits or roster advantages outside the forms expressly permitted under the Collective Bargaining Agreement.27 Once a team triggers a hard cap, any further compensation that exceeds the cap is strictly impermissible.28
The salary cap is intended to help preserve competitive balance and prevent wealthier franchises from leveraging their financial resources to outcompete smaller-market teams.29 Potential penalties range from substantial fines and the forfeiture of draft picks to suspensions and contractual sanctions.30
B. Wong Investment & Red Flags
Another significant development comes from Clippers’ minority owner, Dennis Wong. Wong was Ballmer’s college roommate and owns approximately 1% of the Clippers with Ballmer owning the rest.31 In December of 2022, Wong invested $2 million into Aspiration (who employed Wong’s daughter according to Torre32) just nine days before Aspiration wired Kawhi Leonard $1.75 million.33
This investment occurred during a time when it was “clear that the firm was losing money.”34 A former anonymous Aspiration employee told Torre that on the same day of the wiring, “20% of Aspiration’s staff was laid off.”35 Another anonymous employee added about the conspicuous nature of the investment, “One, we’re broke … So to invest in a broke company is beyond me. And then the other thing is the amount that’s being invested, that’s such a nominal amount if we’re talking pure investment, especially in a late-stage startup that’s … already raised a year earlier $300 million (sic), what does $2 million buy you?”36
Three months after Wong’s investment, Ballmer infused another $10 million into the company.37 Viewed collectively, these transactions raise further questions about the economic substance and reasoning of these investments into a failing company, particularly given the proximity between Wong’s capital contribution and Aspiration’s payment to Leonard.
C. Ballmer, Leonard, and the NBA’s Response
Since these allegations came to light, Ballmer has stated he is the victim of fraud. “They conned me,” Ballmer told ESPN. “I made an investment in these guys, thinking it was on the up and up, and they con me. At this stage, I have no ability to predict why they might have done anything they did, let alone the specific contract with Kawhi.”38 Now Ballmer does not dispute that he introduced Aspiration to Leonard, but he said the interaction stopped there. According to Ballmer, owners can introduce our sponsors to our athletes.39 However, there can be no further involvement after the introduction.40
Leonard, a famously quiet superstar in the eyes of the public, was also dismissive of any wrongdoing and continued Ballmer’s sentiment that it was all fraud. Leonard referred to all the news reports as “conspiracies.”41 Leonard denied reports that he did not perform any services with Aspiration. “I understand that full contract and the services that I had to do,” he added. “Like I said, I don’t deal with … clickbait analysts or journalism that’s going on. … It’s old. This is all new to you guys. The company went bankrupt a while ago. We already knew this was going to happen.”42
In response, the NBA hired the law firm of Wachtell, Lipton, Rosen & Katz to conduct an investigation regarding these allegations.43 Commissioner Adam Silver pledged to “get to the bottom” of this situation; while adding “[W]e will be thorough, but we will begin with a presumption of innocence, not a presumption of guilt … and then we will follow the facts.”44
Although the league has previously confronted efforts by teams to maneuver around the salary cap, the present situation invites comparisons to the Minnesota Timberwolves’ handling of Joe Smith’s contract in 1999. Coming out of the 1999 lockout, the Timberwolves signed former No. 1 pick Joe Smith to a series of short, below-market contracts to pair him with up with superstar Kevin Garnett.45 Smith notably turned down lucrative long-term deals elsewhere to sign these team-friendly contracts.46 Subsequent litigation between Smith’s agents revealed a secret agreement guaranteeing future contracts to circumvent the NBA’s salary cap, prompting then-Commissioner David Stern to impose severe sanctions for one of the league’s most blatant cap violations resulting in multiple lost first-round draft picks and maximum fines.47
III. Conclusion & Looking Forward
The central question is not whether Leonard was paid by a team sponsor, but whether the Clippers or their ownership was sufficiently involved such that the payments functioned as indirect team compensation prohibited by the NBA salary cap. At this time, the NBA’s investigation remains ongoing, and none of the allegations have been proven. Nevertheless, if Torre’s reporting is deemed correct and the NBA’s investigation ultimately confirms the alleged payments, the arrangement would function as an unlawful bonus designed to induce Leonard to remain with the Clippers.48
It remains unclear whether the Aspiration arrangement represents an isolated episode or an early example of a broader strategy to circumvent salary cap restrictions. This case raises difficult questions about whether teams, owners, or players might increasingly rely on third-party sponsors to provide compensation that falls outside of the Collective Bargaining Agreement. Just as importantly, the episode underscores how unlikely such arrangements are to come to light absent the public disclosure mechanisms of bankruptcy. If Aspiration had not filed for Chapter 11, the financial relationships at issue may never have been exposed.
More broadly, this situation underscores an often-overlooked consequence of bankruptcy. Few would have predicted that the collapse of a climate finance firm could trigger renewed scrutiny of an NBA player’s compensation. Yet public bankruptcy proceedings have a unique capacity to expose financial relationships that private contracts and regulatory oversight may fail to uncover. In that sense, Aspiration’s bankruptcy will do more than redistribute losses among creditors, it could put a spotlight on an NBA contract from the richest owner in all of sports with his silent superstar.
About the Author
Kellen Sweeney is a third-year law student at Widener University Delaware Law School. He is currently a Staff Editor for Volume 51 of the Delaware Journal of Corporate Law. Kellen’s other extracurricular activities include being a member of the Moot Court Honor Society, Treasurer of Youth Court, a participant in the annual Duberstein Bankruptcy Moot Court Competition, and a research and teaching assistant for Professor Geeta Kohli. Kellen is a graduate of James Madison University with a major in business management and a minor in history. After graduating and taking the Delaware bar, Kellen will be an associate at Cole Schotz P.C. working in their bankruptcy department in Wilmington, Delaware. Outside of law school, Kellen enjoys working out, watching sports, going to the beach, and spending time with family and friends.
[1] Case Summary: Catona Climate Chapter 11, Insights (Apr. 3, 2025), https://bondoro.com/catona-climate/ [hereinafter Case Summary].
[2] Id.
[3] Baxter Holmes, Aspiration Co-founder Joseph Sanberg Pleads Guilty to Wire Fraud, ESPN (Oct. 20, 2025, 09:04 PM), https://www.espn.com/nba/story/_/id/46665460/aspiration-co-founder-joseph-sanberg-pleads-guilty-wire-fraud (“Aspiration co-founder Joseph Sanberg, whose former company is embroiled in an NBA scandal involving the LA Clippers, formally pled guilty to two counts of wire fraud in federal court in downtown Los Angeles on Monday.”).
[4] Case Summary, supra note 1.
[5] Id.
[6] Id.
[7] Id.
[8] 11 U.S.C. § 107(a).
[9] Getting Public Information in Chapter 11, Insights (Dec. 13, 2023), https://www.hsfkramer.com/en_US/insights/2023-12/getting-public-information-in-chapter-11.
[10] Scott Cacciola & Richard Sandomir, Steve Ballmer Said to Sign $2 Billion Deal to Buy Clippers, N.Y. Times (May. 30, 2014), https://www.nytimes.com/2014/05/31/sports/basketball/steven-ballmer-buys-los-angeles-clippers-from-rochelle-sterling.html (noting that this purchase following another league investigation and lifetime ban of former owner Donald Sterling who was banned due to racist remarks regarding black players and black fans attending games).
[11] Dan Woike, Sam Amick, & Mike Vorkunov, What We Know About ‘Uncle Dennis’: A Central Figure in the Kawhi Leonard, Clippers Investigation, N.Y. Times (Sep. 26, 2025), https://www.nytimes.com/athletic/6658362/2025/09/25/kawhi-leonard-clippers-uncle-dennis-nba-investigation/.
[12] Ramona Shelburne, Clippers’ Ballmer details affiliation with Aspiration in wake of Kawhi Leonard report, ESPN (Sep. 5, 2025, 12:24 AM), https://www.espn.com/nba/story/_/id/46161800/clippers-ballmer-details-affiliation-aspiration-wake-kawhi-leonard-report [hereinafter Shelburne].
[13] Joe Vardon & Sam Amick, Kawhi Leonard, Clippers Used Endorsement Deal To ‘Circumvent’ NBA Salary Cap: Report, N.Y. Times, (Sep. 3, 2025), https://www.nytimes.com/athletic/6595033/2025/09/03/kawhi-leonard-clippers-salary-cap-circumvention-accusations-aspiration/?searchResultPosition=13.
[14] Woike, Amick, & Vorkunov, supra note 12.
[15] Pablo Torre Finds Out: The Silent Superstar and the Rotten Apple Tree (The Athletic, Sep. 3, 2025).
[16] Vardon & Amick, supra note 13.
[17] Id.
[18] Id.
[19] Id.
[20] Joe Vardon, Aspiration Paid Kawhi Leonard Days After Investment by Clippers’ Minority Owner: Report, N.Y. Times (Sep. 11, 2025), https://www.nytimes.com/athletic/6618230/2025/09/11/aspiration-paid-kawhi-leonard-days-after-investment-by-clippers-minority-owner-report/.
[21] Vardon & Amick, supra note 13.
[22] Id.
[23] Vardon, supra note 20.
[24] Vardon & Amick, supra note 13.
[25] Mike Vorkunov, Clippers Owner Steve Ballmer Invested Additional $10M in Company Sponsoring Kawhi Leonard, N.Y. Times (Sep. 13, 2025), https://www.nytimes.com/athletic/6624269/2025/09/12/clippers-steve-ballmer-kawhi-leonard-aspiration-investment-sponsorship/ (“The contract was, however, much richer than Aspiration’s deals with other endorsers, according to the former executive who related that Leonardo DiCaprio and Robert Downey Jr. both received less than $2 million in equity, while Drake invested $4 million but also received carbon offsets).
[26] Jeff Benson, How Does the NBA Salary Cap Work?, Front Office Sports (Jul. 10, 2025), https://frontofficesports.com/how-does-the-nba-salary-cap-work/.
[27] Id.
[28] Id.
[29] Nick Eisner, From Pros to College: Kawhi Leonard Scandal Raises Questions About Oversight in Sports, The Tulane Hullabaloo (Sep. 24, 2025), https://tulanehullabaloo.com/70590/sports/from-pros-to-college-kawhi-leonard-scandal-raises-questions-about-oversight-in-sports/#:~:text=It%20would%20violate%20the%20salary%20cap%20rules%2C,picks%20to%20suspension%20and%20potential%20contract%20penalties.
[30] Id.
[31] Vardon, supra note 20.
[32] Chris Cwik, Clippers Co-owner Dennis Wong Reportedly Invested $1.99 Million in a Failing Aspiration Days Before Kawhi Leonard Payment, Yahoo! Sports (Sep. 11, 2025), https://sports.yahoo.com/nba/breaking-news/article/clippers-co-owner-dennis-wong-reportedly-invested-199-million-in-a-failing-aspiration-days-before-kawhi-leonard-payment-133036644.html.
[33] Will Backus, Kawhi Leonard Was Paid by Aspiration Days After Clippers’ Minority Owner Invested in Company, Per Report, CBS Sports (Sep. 11, 2025, 11:54 AM), https://www.cbssports.com/nba/news/kawhi-leonard-was-paid-by-aspiration-days-after-clippers-minority-owner-invested-in-company-per-report/.
[34] Vardon, supra note 20.
[35] Backus, supra note 33.
[36] Vardon, supra note 20.
[37] Vorkunov, supra note 25.
[38] Shelburne, supra note 12.
[39] Id.
[40] Id.
[41] Law Murray, Kawhi Leonard Dismisses ‘Conspiracies’ with Aspiration Endorsement Contract, N.Y. Times (Sep. 29, 2025), https://www.nytimes.com/athletic/6674340/2025/09/29/kawhi-leonard-media-day-aspiration/.
[42] Id.
[43] Mike Vorkunov & Alex Andrejev, Adam Silver Says NBA Investigation Will ‘Get to the Bottom’ of the Kawhi Leonard Accusations, N.Y. Times (Sep. 17, 2025), https://www.nytimes.com/athletic/6637165/2025/09/17/nba-investigation-kawhi-leonard-adam-silver/?searchResultPosition=5.
[44] Id.
[45] Jon Krawczynski, NBA Investigation into Kawhi Leonard, Clippers Opens Old Wounds for Timberwolves, N.Y. Times (Sep. 4, 2025), https://www.nytimes.com/athletic/6595780/2025/09/04/kawhi-leonard-clippers-timberwolves-joe-smith/.
[46] Id.
[47] Id.
[48] Eisner, supra note 29.
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