02/23/2010 12:00AM

Bank drops Zayat trustee request


LEXINGTON, Ky. - Just days before Zayat Stables' Eskendereya won the Feb. 20 Fountain of Youth Stakes in dominating fashion, Fifth Third Bank reversed its call for a trustee to oversee Eskendereya and more than 200 other horses in Ahmed Zayat's Thoroughbred stable.

Fifth Third earlier had called for a court-appointed trustee to manage the stable, which filed for Chapter 11 bankruptcy in New Jersey earlier this month. But, according to the Lexington Herald-Leader, the bank in a Feb. 16 letter notified New Jersey judge Donald Steckroth that "we have determined that we will not be filing a motion to appoint a Chapter 11 trustee at this time, though we reserve our right to do so in the future."

Fifth Third sued Zayat Stables late last year, alleging that Zayat had defaulted on loans totaling more than $34 million, for which his bloodstock was collateral. Zayat has countersued and accused Fifth Third of predatory lending practices.

The bank previously had sought a trustee to manage the day-to-day operations of Zayat Stables, and to protect Fifth Third's interest in the equine collateral. Zayat has opposed any motion for a court-appointed trustee or receiver and provided affidavits from trainers reporting that his stable's horses are all in good condition and receiving good care.

The New Jersey bankruptcy court has approved Zayat's use of as much as $1,040,892 in cash collateral to maintain and operate the stable.

Fifth Third attorney Craig Robertson declined to comment on the case or the bank's motives, saying that the bank does not comment on pending litigation.