$19 Million in Debt, Ahmed Zayat Files for Chapter 7 Bankruptcy
Through TD Thornton
Claiming access to just $ 300 in cash and $ 14.22 on two checking accounts, financially struggling Triple Crown winning breeder and owner Ahmed Zayat filed for Chapter 7 protection on September 8. in United States bankruptcy court in his home state of New Jersey.
In court documents, Zayat claims $ 19,371,466 in total liabilities against an estimated total assets of $ 1,892,815.
Thoroughbred trainers, horse farms, breeding companies, veterinarians and horse transport companies are among the 132 entities listed as creditors who owe $ 14,755,717 in “unsecured non-priority debts”. In his legal record, Zayat marked most of these debts as “disputed”.
Under Chapter 7 of the bankruptcy laws, unsecured non-priority debts are at the bottom of the hierarchy for payment – if paid at all – once a trustee is appointed to liquidate assets and discharge debts. .
Zayat’s family-run racing business, Zayat Stables LLC, is listed as a co-debtor on 112 of these 132 unsecured non-priority claims. In the file, Zayat described his racing business as “insolvent”. He noted that a Kentucky receiver is in the process of liquidating those equine assets following an ongoing $ 23 million lawsuit filed in January by a New York lender alleging fraud and defaults.
Zayat’s personal assets consist primarily of a single-family home in Teaneck (with adjacent unbuilt lots) valued at $ 3.55 million. His documents claim $ 1.775 million in equity in this property.
Zayat claims zero dollars of current monthly income. Her record indicates that her household income is made up entirely of the $ 13,875 monthly salary her non-debtor spouse earns as a speech therapist. Two dependent children live with Zayat and his wife. He reports a monthly liability of $ 72,903 and claims he does not own any stocks, bonds or retirement accounts.
Five entities top the list of the $ 4,616,294 of receivables secured by the family home through mortgages or loan agreements. Upon liquidation, they would be paid first according to the protocols in Chapter 7.
The Internal Revenue Service and 12 individual state tax agencies have the upcoming debt cuts as priority unsecured applicants. Each is listed as due for “unknown” amounts.
Among the unsecured non-priority applicants who would be the last to be paid (if any) are coaches Rudy Rodriguez ($ 394,437), Richard Baltas ($ 316,070), Bob Baffert ($ 227,884), Brad Cox (194 $ 836), Todd Pletcher ($ 125,598), Mike Maker ($ 120,921) and Steve Asmussen ($ 102,541).
The documents indicate that Zayat has unsecured, non-priority debts to the Brook Ledge shipping company of $ 164,401, and there is over $ 200,000 in debts with veterinary providers including Hagyard Equine Medical, Kentucky Equine Medical Associates, Kesmarc , Rood & Riddle, Stephen Selway and Teigland, Franklin and Brokken.
By far the largest debt on the list is the $ 7.9 million listed for Manhattan-based Cedarview Capital Management LP.
Zayat’s bankruptcy filing will undoubtedly have repercussions on the four civil cases in which he has said he or his racing company are currently defendants. The most significant of these is the aforementioned $ 23 million lawsuit filed by MGG Investment Group, LP, in Circuit Court in Fayette, Kentucky.
This lawsuit revolves around accusations that Zayat Stables concealed the proceeds from the sale of nine shares of lifetime breeding rights to the winner of the Triple Crown in 2015. American Pharaoh, plus at least 15 other “precious racing thoroughbreds” held as collateral, including retired Zayat color holders and Bodemeister, Eskendereya, El Kabeir and Zensational blood rights assets.
A hearing in the case was already scheduled for September 9, and the court overseeing this action and the parties to it have already been notified of Zayat’s bankruptcy filing on Tuesday.
Years before Zayat Stables bred and ran the champion American PharaohAhmed Zayat was in the news and in the courts over money issues. In 2009, Fifth Third Bank sued Zayat for $ 34 million, alleging he defaulted on his loans.
This lawsuit resulted in an agreement with the Federal Bankruptcy Court in 2010 to repay the loans while reorganizing Zayat Stables. At the time of the settlement, Zayat said in a statement that “Zayat Stables will come out in a stronger financial position than ever before, and this will allow us to devote all of our energies to what is most important: nurturing, developing and running the next one. generation of great American horses.
According to the U.S. Courts website, Chapter 7 bankruptcy protection provides for the liquidation of a debtor’s non-exempt assets and the distribution of the proceeds to creditors.
However, to be eligible for Chapter 7, a debtor must first meet strict income requirements. If a debtor’s current monthly income is above the state median, the Bankruptcy Code requires the application of a “means test” to determine whether the Chapter 7 filing is presumed abusive.
If a debtor does not pass the means test, Chapter 13 bankruptcy filing might be an option. But this version pays off the debt via a repayment plan over a period of three or five years instead of a liquidation.
The court on Wednesday appointed a trustee to oversee the bankruptcy. This is Barbara Edwards, a lawyer based in Fair Lawn, New Jersey.
A telephone hearing date of October 5 has been set, at which Zayat is to appear and undergo an examination under oath. Creditors can attend, but are not required to do so.
The deadline for anyone wishing to oppose the discharge from bankruptcy or contest whether certain debts are dischargeable is December 4.
In the September 9 file that appointed the trustee, the court added a note that reads: “No property appears to be available to pay creditors. Therefore, please do not file a proof of claim now. If it later appears that property is available to pay creditors, the clerk will send you another notice telling you that you can file a proof of claim and specifying the deadline.