05/20/2010 11:00PM

Bank sues Stonewall over default


LEXINGTON, Ky. - Fifth Third Bank has sued Stonewall Stallions, farm owner Audrey Haisfield, and a number of related entities, alleging the Midway, Ky., breeding operation defaulted on $14.8 million in loans.

In its complaint filed May 20 in Fayette Circuit Court, Fifth Third seeks to sell Stonewall's bloodstock, including any interests Haisfield or Stonewall Stallions holds in the farm's six stallions. The bank also is requesting that the court appoint a receiver to manage the operation.

Fifth Third names Haisfield as a guarantor on loans totaling $14,850,155 and her son Marc as co-guarantor on $1,062,346 of those loans.

According to Stonewall attorney John Hamilton, the farm recently negotiated an agreement to turn its bloodstock over to the bank.

"We're still trying to work with the bank," Hamilton said. "We were taken by surprise with the filing, because we'd worked out the terms of an agreement to turn over all of the horses to them. In fact, the final documents were all sent out to be signed. So this took us by surprise,."

The farm stands the 2005 champion turf male Leroidesanimaux, A. P. Warrior, Doneraile Court, Strong Contender, Unforgettable Max, and Value Plus in Kentucky. At its Florida division, Stonewall Farm Ocala, it also stands British Blue, Da Stoops, Frisco Star, It's No Joke, and Spellbinder; the Ocala farm recently pensioned Marquetry.

Stonewall Stallions sold its majority interest in Medaglia d'Oro to Darley last June for a private sum reportedly based on a total valuation of between $40 million and $45 million. This is the second major suit against the farm alleging loan defaults. Last November, Harleysville National Bank and Trust in Pennsylvania sued Stonewall and Audrey Haisfield for alleged default on $15.2 million in loans.

In March, a group of shareholders named MDO LLC also sued the farm seeking 2009 stud-fee income from six shares it held in Medaglia d'Oro. Stonewall counters that, as part of a $6.2 million payment to MDO, the group released Stonewall from further obligations. The case is pending.

Stonewall is the second major Thoroughbred operation that Fifth Third has sued in the last year. In December, the bank sued prominent owner Ahmed Zayat's stable for alleged default on about $34 million. Zayat countersued, alleging fraudulent and predatory lending practices, and his stable has filed for Chapter 11 bankruptcy protection to shield its assets. Those cases are pending.

Zayat, too, has alleged that he was close to working out an agreement with the bank and was surprised by the lawsuit to foreclose on his stable.

Asked whether Stonewall planned a countersuit, Hamilton said: "We're keeping our options open."

Craig Robertson, attorney for Fifth Third, said the bank does not comment on pending litigation.