05/25/2010 11:00PM

Receiver named for Stonewall stock

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LEXINGTON, Ky. - Stonewall Stallions in Midway, Ky., and Fifth Third Bank have agreed to the appointment of a receiver to manage the breeding operation's bloodstock, clearing the way for the farm's collateralized bloodstock to be sold.

Fifth Third sued Stonewall, owner Audrey Haisfield, her son Marc Haisfield, and related entities on May 20, alleging they had defaulted on loans totaling nearly $14.9 million.

Under the agreement filed Wednesday in Fayette Circuit Court, Meg Levy's Bluewater Sales in Lexington will act as receiver for 145 horses, two stallion interests, and related assets at Stonewall.

The agreement lists assets to be sold including Grade 1-winning mares Nonsuch Bay and Jostle and stallion interests in Doneraile Court and Strong Contender. The bank also has listed a 19.2 percent interest in stud fee income due for 2007 champion older male Lawyer Ron, who died last year, but Stonewall disputes this. Stonewall also disputes that Fifth Third has a collateral interest in 11 horses on the list.

The agreement requires that Bluewater Sales "take charge of, operate, preserve, maintain and care for the collateral, and its progeny, until it can be sold in the manner which the receiver and Fifth Third deem commercially reasonable."

Levy said Wednesday that the horses will be relocated from Stonewall and "will be going to the appropriate auctions for their ages."

Bluewater Sales also will make training and racing decisions regarding any of the horses currently in training. The consignment agency will receive a 3-percent commission on each horse's sale, as well as a day rate and a $200 per hour fee "for its time associated with overseeing horses located outside of Kentucky, collecting stud fees, managing and collecting stallion contracts, collecting breeder's awards, and accounting to the Court," according to the agreement.

Craig Robertson, Fifth Third's Lexington-based attorney, declined to comment on Wednesday. But John Hamilton, representing Stonewall, said the receiver agreement had been in place before Fifth Third sued Stonewall.

"This follows what we agreed to before the suit," he said. "It's all going according to plan."

In related news, a U.S. District Court judge in Pennsylvania has granted summary judgment to Harleysville National Bank, which had sued Stonewall and owner Audrey Haisfield for allegedly defaulting on about $15.2 million in loans.

Judge John R. Padova granted the Pennsylvania bank's motion and ordered Haisfield to pay $351,656, as well as court costs, fees, and interest.

Attorneys at Thorp Reed & Armstrong who had represented Haisfield in the Pennsylvania case did not immediately return calls seeking comment.

Bank seeks to block Zayat move

In other legal news, Fifth Third Bank also has asked a New Jersey bankruptcy court not to approve Zayat Stables' disclosure statement, part of the stable's Chapter 11 reorganization plan.

Late last year, Fifth Third sued prominent Thoroughbred owner Ahmed Zayat's Zayat Stables, alleging it had defaulted on $34 million in loans. Zayat has countersued, alleging predatory and deceptive lending practices, and filed for Chapter 11 bankruptcy protection in February.

In an objection filed May 25 in New Jersey, Fifth Third alleges the stable's disclosure statement "fails to disclose material information that is necessary for creditors to determine whether to vote for or against" the stable's reorganization plan. Among other things, the bank contends that "creditors are left to wonder what effect Eskendereya's injury will have on the debtor's plan," according to court documents.

Wood Memorial winner Eskendereya had been the 2010 Kentucky Derby's heavy favorite before sustaining an injury that ruled him out of the race on April 25. Zayat has since privately sold an undisclosed interest in the Giant's Causeway colt to Jess Jackson.

In the disclosure statement filed on April 16, Zayat Stables had projected it would sell 100 percent of Eskendereya in 2010.

Zayat Stables' reorganization plan must be approved by a select creditors' committee and by the court before it can come into effect.