Judge denies motion to end Zayat Stables receivership

LEXINGTON, Ky. – A Fayette County judge on Thursday denied a motion sought by lawyers for Ahmed Zayat to dissolve a receivership that is seeking to liquidate his racing assets as part of a proceeding initiated by a New York investment company that has sued the owner, parties in the case said Friday.

Judge Kim Bunnell denied the motion during a hearing Thursday afternoon in which she also ordered Zayat to provide documentation of his stable’s racing assets to the appointed receiver by Feb. 14. The order came after the receiver, Elizabeth Woodward of the accounting firm Dean Dorton, filed a document Wednesday with the court contending that Zayat has not been fully cooperative with the process.

Craig Robertson, the attorney for MGG, the New York company that sued Zayat for $23 million in January, said that he was pleased with the judge’s ruling on Thursday but said that the process to determine the entirety of Zayat’s assets is expected to take months.

“I don’t know enough at this point to make an evaluation of that,” Robertson said, when asked whether MGG was optimistic that it could be made whole on the debt Zayat owes to the company. “We’re still very early in the process, and it’s too premature to say that. We’re concerned, but we don’t have enough information at this point.”

Woodward’s document claimed that she was only able to find one account connected to Zayat’s racing stable, and it had approximately $2,000 in it. Since being appointed receiver on Jan. 22 after an emergency hearing, she has attempted to create an inventory of all of Zayat’s equine holdings, she said, but she also contended that Zayat has not been fully cooperative with her inquiry.

“The receiver has made considerable progress, but initial set-up of the receivership accounts and the collection and sales process was hampered by the receiver’s lack of accounting information,” stated the filing, which was made by an attorney for the receiver. “Despite the language of the order granting the receiver possession and control of the property, her personal request to Mr. Zayat and her counsel’s formal demand for the turnover of books and records have yet to result in her receiving basic financial information from Zayat Stables.”

Zayat’s attorney, Jay Ingle, declined to comment Friday.

The lawsuit and receivership is the latest in a string of financial troubles for Zayat, who raced 2015 Triple Crown winner American Pharoah. In 2010, his stable was reorganized in bankruptcy court after he was sued by a previous lender, Fifth Third Bank. After the stable was placed in receivership, trainer Mike Maker filed a lawsuit contending Zayat has reneged on a deal to repay training debts.

Woodward said in her filing that she has located a number of Zayat’s horses with trainers and farms “who have not been paid in some time.” The filing also said that “five or six” horses have been entered in the upcoming Fasig-Tipton winter sale.

The receiver is expected to file monthly status reports with the court in order to detail the progress she has made in accounting for the stable’s assets. She is being assisted by Gatewood Bell, a Lexington bloodstock agent.