Marwan Koukash Removed As Registered Owner Following Bankruptcy

Chester regular Marwan Koukash has been removed as a registered owner by the British Horseracing Authority (BHA) due to being declared bankrupt, according to published reports.

The 69-year-old Palestinian won the Chester Cup four times with his runners between 2008 and 2018. His record at the track stands at 97 winners. Holding a PhD in electrical engineering, the businessman owned the Salford City Reds rugby team at one time, as well as a string of hotels among his various interests.

The bankruptcy petition was filed in June of 2022 and granted in September of that year. Koukash had his final runner in November, and, as soon as the BHA was made aware of the former millionaire's situation, his colours were struck from the register.

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New Court Filings in Zayat Bankruptcy Proceedings

The trustee overseeing owner, breeder Ahmed Zayat's personal bankruptcy proceedings made several court filings Tuesday to recover roughly $90,000 in allegedly fraudulent payments to various law firms.

According to the court filings, Zayat was insolvent at the time the transfers were made, and therefore, the law firms who are the defendants in the suits received more than they would have done through the Chapter 7 bankruptcy proceedings “had the Transfer[s] not been made.”

Trustee Donald Biase alleges in his court filings that the largest transfer of money Zayat fraudulently made was $42,812.32 to Rabinowitz, Lubetkin and Tully.

Zayat also made separate $20,000 payments to law firms Landrum & Shouse and Lavely & Singer respectively, and another $7,500 to Becker & Poliakoff, the suits allege.

Biase suggests that the monies stipulated might not be the total amounts Zayat allegedly paid to each company, his attorney writing in all filings that Biase is seeking to recover both the stipulated transfers “and such other Transfers that may be unknown to the Trustee.”

TDN reached out via email to each of the law firms listed as defendants in the filings but didn't hear back from any before deadline.

When reached by phone Tuesday, Zayat declined to comment.

This latest round of legal crossfire constitutes just the latest twist in a long, complicated and often-times convoluted war of financial attrition, as creditors have sought to reclaim millions from Zayat and his now-disbanded Thoroughbred racing and breeding stable, one most famously attached to 2015 Triple Crown winner American Pharoah.

In his own Chapter 7 filing in 2020, Zayat admitted to owing some $19 million to 132 non-secured creditors, the majority of whom consisted of Thoroughbred trainers, horse farms, bloodstock businesses, veterinarians, and equine transportation companies.

Towards the end of last month it appeared as though events had drawn to a close with the approval of two settlement plans in separate bankruptcy cases. Neither settlement delivered significant compensation to these 132 non-secured creditors though.

In Zayat's personal bankruptcy case, the trustee in June negotiated a $1.5 million settlement to be paid by the debtor's brother, Sherif Zayat, one which allows Zayat and his family to continue to live in an eight-bedroom, 7,714-square-foot home in Teaneck, New Jersey, that is currently assessed at $2.6 million.

In July, the court-appointed trustee in the involuntary bankruptcy case negotiated a settlement in which Zayat and his family members divvy up $5 million between MGG Investment Group and the trustee.

MGG is the lender that alleged in a 2020 lawsuit that Zayat and his family members fraudulently obtained $30 million in loans, then never repaid a large chunk of that debt.

Of that Zayat Stables settlement, only $30,000 was earmarked for the unsecured creditors who are legally much further down the payment ladder of priority.

In each of the court documents filed Tuesday, Biase seeks judgment against the defendants “for the avoidance and recovery” of the amounts allegedly transferred, for the defendants “to immediately pay to the Trustee the sums owed,” the interest owed and costs of suit, and “for such further relief as the Court may allow.”

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$1.5m Zayat Settlement to Make Small Dent in Overall $19m Debt

The trustee in Ahmed Zayat's personal bankruptcy case has negotiated a $1.5-million settlement to be paid by the debtor's brother, Sherif Zayat, that a court document stated will “resolve all claims and causes of action” related to the multiple mortgages on Zayat's home.

The motion for approval of that settlement, if so ordered by a judge in a New Jersey federal bankruptcy court July 6, doesn't mean the end to the complicated, now 21-month-long Chapter 7 petition by the allegedly insolvent former Thoroughbred owner and breeder.

But it does mean some of that $1.5 million might trickle down to creditors once the case gets fully settled.

As an attorney for trustee Donald Biase put it in his June 6 court filing, the settlement will “provide a benefit for the Debtor's estate, which was otherwise uncertain.”

The settlement documents were filed exactly seven years and one day after Zayat's superstar homebred American Pharoah swept the 2015 Triple Crown.

The $19-million debt question for Thoroughbred trainers, horse farms, bloodstock businesses, veterinarians, and equine transportation companies who are among the 132 entities listed as non-secured creditors still hasn't changed much.

That's because the money owed to them is in the form of “non-priority unsecured claims,” which puts those people and businesses far down in the pecking order for repayment of Zayat's debts.

Under Chapter 7 bankruptcy laws, non-priority unsecured claims are at the bottom of the hierarchy to get paid–if they get paid at all–once a trustee liquidates assets and discharge debts. They get ranked behind “secured” loans in which property is pledged as collateral, like with liens and mortgages.

The June 6 filing stated that there are five known first-, second- and third-mortgage loans secured by Zayat's 7,714-square-foot home and two adjacent lots in Teaneck, New Jersey.

However, the same document stated that three of those mortgages–which were made by friends and family members and not lending institutions or banks–would be considered by the trustee as “avoidable transfers,” which means that they can be canceled and the proceeds returned to the estate for distribution to creditors. Avoidable transfers can also lead to fraud charges.

One of those property-secured loans that Biase wrote was “avoidable” was for $500,000 from the Egypt-based Sherif Zayat.

That loan was recorded as a mortgage with a New Jersey county clerk Sept. 2, 2020–six days before Ahmed Zayat filed for Chapter 7 bankruptcy protection while claiming that he had only $300 in cash and $14.22 in two checking accounts.

On September 14, 2020, an involuntary bankruptcy petition was initiated against Zayat's family racing business, Zayat Stables, LLC. That case is separate from this personal bankruptcy case, although many of the racing-related creditors overlap in both cases.

In a riches-to-rags case brimming with fraud allegations since its onset, Biase's filing stated that he has attempted to trace the tangled web of Zayat family finances via the “issuance of numerous Rule 2004 Subpoenas, reviewing thousands of pages of documents, including bank statements and tax returns, and conducting Rule 2004 depositions and extensive motion practice, including numerous motions to obtain access to the Debtor's real property, and the contents of same, by my appraisers.”

Beyond not having his Chapter 7 bankruptcy protection granted by the court if he isn't being truthful, Zayat faces a possible federal investigation and/or charges if the U.S. Department of Justice believes crimes have been committed.

Biase has repeatedly claimed the Zayat and his family have hindered his investigation with evasive tactics and non-compliance.

Zayat has consistently denied that he has engaged in any illegal activity or that he is hiding money. He has also insisted that neither he nor his family members are trying to obstruct the work of either of the trustees who are assigned to vet his personal finances and business operations.

The June 6 filing revealed one new nugget about Ahmed Zayat that had not been previously contended: “The Debtor has an ownership interest in a farm located in Egypt,” the Biase filing stated.

If true, it is unclear whether that alleged property interest could be also attached as an asset to pay creditors. The filing did not elaborate either way.

The settlement document, which was signed by all parties May 26, stated that “the Debtor, the Zayat Parties, and Sherif, and any entity they have an interest in shall waive any claim against the Debtor's estate [and] the Parties shall have released each other from any and all claims and causes of action and the Trustee shall be deemed to have abandoned the Debtor's estate's interest in the NJ Property pursuant to Section 554 of the Bankruptcy Code.”

Biase's filing stated that this type of settlement was preferable to continuing to fight the matter in court and/or by forcing a sale of the real estate.

“Though the Trustee believes that he would likely prevail on the claims against the Debtor, the Zayat Parties, and Sherif, the Trustee wishes to settle the claims, in order to save the Debtor's estate time and money that would otherwise be spent on litigation of the claims,” the filing stated.

“With respect to the NJ Property, even if the Trustee could obtain an offer of $4.8 million and avoid [the three mortgages with individuals] after deducting the first and second mortgages totaling $3.4 million and the broker's commission of $240,000, there would be non-exempt net equity in the approximate amount of $580,000…” the filing stated.

“This amount also does not include the Debtor's potential homestead exemption, the cost and time to seek approval under [the] Bankruptcy Code to sell the NJ Property, and the time and cost to avoid the [individual mortgages],” the filing stated.

“The Settlement Amount of $1.5 million greatly exceeds the potential non-exempt equity in the NJ Property,” the filing summed up.

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New Fraud Allegations Against Zayat Over $400K Mortgage

In a bankruptcy case already brimming with fraud allegations that has languished in federal court for over a year, the trustee pouring over the finances of Ahmed Zayat filed a new complaint alleging wrongdoing Friday.

This latest court action in the twisted saga of the owner and breeder of Triple Crown champ American Pharoah alleges that Zayat and his wife, Joanne, secured a $400,000 mortgage on two back lots adjacent to their New Jersey home in 2018, then had the money wired to the bank account of Zayat's fiscally troubled racing stable in an alleged attempt to execute a “fraudulent transfer” that resulted in “unjust enrichment.”

According to a Sept. 24 filing by trustee Donald Biase in United States Bankruptcy Court (District of New Jersey), “The Defendant received payments on the Leicht Mortgage where collateral was against the Debtor's Properties as opposed to the party in receipt of the funds, Zayat Stables, LLC…. The Defendant's Leicht Mortgage placed a first lien on the assets of the Debtor's Properties and the equity in the Properties, thereby reducing the equity available to the Debtor's individual legitimate creditors.”

Many of those creditors to whom Zayat owes $19 million are Zayat's former Thoroughbred trainers, plus numerous breeding, boarding, horse transportation and veterinary entities.

When he first filed for Chapter 7 bankruptcy protection in September 2020, Zayat said he owned only $300 in cash and $14.22 in two checking accounts.

Yet he and his wife own and live in a 7,714-square-foot home in Teaneck, New Jersey, that is currently assessed at $2.6 million.

And the trustee assigned by the court to find out if Zayat is being truthful about his alleged state of impoverishment has repeatedly told the judge in the case that Zayat and his family members are refusing to cooperate in the trustee's attempt to trace millions of dollars in possibly fraudulent transfers.

In July, Blaise wrote in a court filing aimed at uncovering hidden assets that “Documents obtained by the trustee from third parties strongly suggest that the Debtor still possesses significant assets in Egypt.”

Zayat has repeatedly denied that he has engaged in any illegal activity or that he is hiding money. He has also insisted that neither he nor his family members are trying to hinder the trustee's work.

Beyond not having his bankruptcy protection granted by the court if he isn't being truthful, Zayat faces a possible federal investigation if the U.S. Department of Justice believes a crime has been committed.

The latest legal filing by the trustee lays out the new allegations like this:

“On July 2, 2018, the Debtor and his non-debtor spouse, Joanne Zayat, executed a Mortgage, Assignment of Leases And Rents, Security Agreement, Financing Statement, and Fixture Filing in favor of the Defendant in the amount of $400,000…

“The Leicht Mortgage was secured by two parcels of real property co-owned by the Debtor and Joanne Zayat…. The Properties comprise the back lots of the Debtor's and Spouse's primary residence…

“Documents obtained by the [trustee] indicate that the funds from the Leicht Mortgage, upon closing of the Leicht Mortgage, were deposited via wire transfer into the bank account of [Zayat] Stables. Neither the Debtor nor Joanne Zayat received funds from the Leicht Mortgage despite the Leicht Mortgage being secured by the Debtor's co-owned Properties.

“The Debtor and Joanne Zayat granted a lien on the co-owned Properties without reasonable compensation to same, granting a first position lien to the Defendant reducing the equity in the Properties to the detriment of his other creditors…. The Debtor received no value or less than reasonably equivalent value in exchange for the Leicht Mortgage.”

The filing summed up: “In consideration of the above allegations and counts, the [trustee] demands entry of judgment against the Defendant 1) Cancelling the obligation of the Leicht Mortgage as against the Debtor's Properties on the basis of Fraudulent Transfer; 2) Cancelling the obligation of the Leicht Mortgage based on the Defendant's unjust enrichment.”

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