The opposite of good news for Mr Z

[freddymo]

UGH.

https://www.kentucky.com/sports/hors...239534108.html

[Dahoss]

Feels like that movie Groundhog Day.

[freddymo]

Originally Posted by Dahoss

Feels like that movie Groundhog Day.

Sad but true Dahoss

[jms62]

“I have pushed myself to the brinks of bankruptcy personally by using every dollar I have in America to fund the company until I find an investor to pay you in full.”

Read more here: https://www.kentucky.com/sports/hors...#storylink=cpy

Interesting choice of words.

[-BT-]

This shouldn't come as a surprise given he had similar issues 10 years ago. I know the whole story hasn't come out, but this almost seems like a ponzi scheme, accept he didn't pay back the original investors he kept doubling down on new horses to try and cover his ever mounting debt.

-bt-

[knickslions2]

Originally Posted by -BT-

This shouldn't come as a surprise given he had similar issues 10 years ago. I know the whole story hasn't come out, but this almost seems like a ponzi scheme, accept he didn't pay back the original investors he kept doubling down on new horses to try and cover his ever mounting debt.

-bt-

Holy **** where did you come from

[freddymo]

Originally Posted by -BT-

This shouldn't come as a surprise given he had similar issues 10 years ago. I know the whole story hasn't come out, but this almost seems like a ponzi scheme, accept he didn't pay back the original investors he kept doubling down on new horses to try and cover his ever mounting debt.

-bt-

So without a morsel of first-hand knowledge, you are able to deduce from a journalist's representations of events from one side of the argument that it's a Ponzi Scheme? I don't know what or what, not Zayat did and I am SURE he is no Saint, but have a heart with the seems like a Ponzi Scheme stuff.

Maybe the guy let his son pick out millions of dollars of crap, maybe he foolishly borrowed money to buy of all things(horses)? maybe he was never that rich to play at the level he was?

[-BT-]

Originally Posted by freddymo

So without a morsel of first-hand knowledge, you are able to deduce from a journalist's representations of events from one side of the argument that it's a Ponzi Scheme? I don't know what or what, not Zayat did and I am SURE he is no Saint, but have a heart with the seems like a Ponzi Scheme stuff.

Maybe the guy let his son pick out millions of dollars of crap, maybe he foolishly borrowed money to buy of all things(horses)? maybe he was never that rich to play at the level he was?

what?

I clearly acknowledged that the whole story was not out. But 10 years ago he went through a similar situation with 5/3rd bank where he defaulted on multi-million dollar loans. Guy uses his horses and their breeding rights as collateral for yet another loan and then some how uses those same assets to sell breeding rights, pockets the money and can't meet his loan obligations?

have a heart? are you serious? Why would i lose one "morsel" of sleep for someone who "let his son pick out millions of dollars of crap"? Bottom line it's a bad business for him and the sport.

-bt-

[Kasept]

Zayat asks court to rescind receivership order
Matt Hegarty
Jan 28, 2020

Attorneys for Ahmed Zayat have filed a motion with a Fayette County court in Kentucky to dissolve an order issued last week that placed Zayat’s horse operation in receivership, claiming that the court was biased by Zayat’s lack of representation at a hearing that left the court with a “strongly skewed version of events.”

The motion, filed on Monday in Fayette Circuit Court, asks for the initial order to be rescinded, or, “at minimum,” for a modification of the order to allow for “those acts necessary to effectuate an orderly liquidation” of Zayat’s assets. Those assets formed the basis of the collateral that secured $34 million in loans from the New York-based investment firm MGG beginning in 2016.

The order to put Zayat’s stable in receivership was issued by the Fayette Circuit Court on Wednesday, following an emergency hearing by the court in which no member of Zayat’s legal team appeared.

“MGG and its lawyers ran into court without so much as providing notice to Zayat Stables in an effort to unlawfully seize control of the stables, despite the fact that the parties were in the midst of workout discussions that would have ensured MGG received back every cent of its investment,” the motion by Zayat’s attorneys said.

In its lawsuit, MGG claimed that Zayat had sold shares in a number of racehorses and stallions, including 2015 Triple Crown winner American Pharoah, without notifying the investment firm. MGG said that the sales violated terms of his loans, which were issued based on the value of his equine holdings.

While the two parties do not dispute that Zayat defaulted on his loan payments late in 2019, the motion filed by Zayat’s attorneys claim that Zayat had not endeavored to hide the sales from MGG and had begun working on a liquidation plan for his assets in order to satisfy his outstanding principal and interest payments under the loan covenants. The complaint contends that MGG’s motion had concealed those facts from the court in order to expedite its goal of putting the assets in receivership.

“Far from the active concealment now claimed by MGG, Zayat Stables cooperated and was fully transparent regarding the sales of the American Pharoah breeding rights,” the lawsuit stated. It added: “In retrospect, it is clear that MGG was not working with Zayat Stables in good faith, but was merely gathering information and exhibits for its lawsuit” when negotiating with Zayat over a liquidation plan, the motion claims.

Zayat, who was raised in Egypt and began buying horses in 2002 after he sold his stake in a beverage company to Heineken, has been one of the most visible faces in racing over parts of the past two decades. Most recently, that visibility has in large part been due to American Pharoah, the most popular horse in decades, who in 2015 became the first horse to sweep the Triple Crown races in 37 years.

However, throughout his career, Zayat has also been trailed by financial problems, and multiple trainers have severed their relationships with him over unpaid bills. In 2009, he was sued by his lender, Fifth Third Bank, for $34 million, with the case resolved only after Zayat Stables was reorganized in bankruptcy court. More recently, late last year a trainer in New York attempted to sell two of Zayat’s horses after claiming that Zayat had accumulated debts “going back years,” according to the lawyer representing the trainer.

The motion by Zayat’s lawyers asking the court to dissolve or modify its order for receivership said that MGG failed to tell the court that Zayat had made 37 straight months of payments on his loan agreement prior to defaulting, for a total of $15.5 million in interest, fees, and principal repayment. And it also said that MGG had overbilled Zayat for $900,000 in 2017, an error that was caught by Zayat and which MGG had corrected.

“MGG’s motion left out a considerable amount of relevant facts that resulted in a strongly skewed version of events,” the filing states.

While Zayat’s attorneys state that Zayat provided bank statements to MGG showing that proceeds from the sales of nine shares in American Pharoah had been deposited to the accounts of his stable, the motion by MGG had said that the sales violated covenants in the loan agreement because the breeding rights formed part of the basis of the collateral for the loans, and that any sale would have required approval from the investment company. Zayat’s motion does not address that question.

Zayat’s motion also claims that the court made several errors in the interpretation of law regarding placing business operations in receivership. It also claims that the hearing to consider the motion did not grant Zayat enough time to secure legal representation at the hearing.

In conclusion, the motion argues that the court should allow the two parties to negotiate a liquidation agreement, saying that “it is very possible, if not likely” that Zayat’s remaining equine assets would satisfy the outstanding debts. Both parties have stated that the debt totals $23 million.

“Such a process would serve everyone’s goals in the most efficient way possible and would minimize unnecessary litigation, potential appeal, and violation of the rights of Zayat Stables and particularly Mr. Zayat personally, whose defense would be compromised,” the motion states.