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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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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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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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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Since Sherif El Zayat is not a U.S. resident or citizen, the order stipulates that if he does not comply with the subpoena, the court will hold him in contempt, requiring U.S. Marshalls to detain him upon U.S. arrival.

The trustee in the bankruptcy case, Donald V. Biase, believes that Ahmed Zayat has assets in Egypt being controlled by his brother. Biase wrote in a July filing: “Documents obtained by the trustee from third parties strongly suggest that the debtor still possesses significant assets in Egypt.”

Ahmed Zayat, best known in horse racing as the owner of 2015 Triple Crown winner American Pharoah through his Zayat Stables, filed for Chapter 7 bankruptcy protection on Sept. 8, 2020. Zayat and his racing operation were previously named in a civil lawsuit in Fayette County Circuit Court from New York investment firm MGG Investments, stemming from a $30 million loan he took out in 2016. MGG won a summary judgment in the amount of $24.5 million.

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Zayat claims to be $19 million in debt, and a massive chunk of that money is owed to Thoroughbred-related individuals and entities.

According to documentation filed Apr. 21 in United States Bankruptcy Court (District of New Jersey) by trustee Donald Biase, “The Transfer[s] were made with actual intent to hinder, delay, or defraud creditors of the Debtor.”

As an exhibit, Biase attached a copy of a Sept. 3, 2020, domestic wire transfer for $175,000 between two law firms.

Zayat's name is not listed on that TD Bank document. But the trustee, presumably through forensic accounting practices, is alleging that “the Debtor's books and records disclose” that Zayat orchestrated the transaction, which was allegedly made “without the Debtor receiving a reasonably equivalent value in exchange.”

The recipient of the money was listed as Cohen Tauber Spievack & Wagener, a New York-based law firm. According to a posting from 2015 on that company's website, the firm has represented Zayat in court and “advises Zayat Stables on transactional matters and sponsorship deals related to American Pharoah.”

The timing of that $175,000 transaction is notable because five days later, Zayat filed his petition for bankruptcy protection, signing off on paperwork that alleged he only had $314.22 to his name.

In a separate court complaint, the trustee also wants $28,848 back from New York University (NYU) that Zayat allegedly paid to the school within 90 days prior to his bankruptcy filing.

Zayat has four children, and they all either graduated from or are/were attending NYU. The youngest of the siblings, Emma, just enrolled at the school in 2020, according to her LinkedIn profile (Emma was the inspiration for the name of Littleprincessemma, the dam of American Pharoah).

Even if that money was paid for tuition or a pre-existing debt, the complaint states that (among a list of other legal reasons) the trustee can try to reclaim those funds because “the Debtor was insolvent at the time and [NYU] had reasonable cause to believe that the Debtor was insolvent.”

In the cases of both allegedly fraudulent transfers, the trustee is going after the money not by chasing Zayat himself for it, but by listing both the law firm and NYU as defendants, meaning they would be on the hook for repayment if the judge rules in the trustee's favor.

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That trustee told the court in an April 16 filing that he still does not have access to Zayat's documents held on the Cloud, and he wants the court to both “compel turnover” of the files and to “direct” Zayat to cooperate.

“Given the overwhelming allegations of fraud and expected sought-after delay, the Chapter 7 Trustee simply cannot wait any longer for access to the Cloud,” the filing states. “Although Mr. Zayat has represented that the Cloud is secure and that he is aware of his obligations, the longer the information on the Cloud remains in the hands of Mr. Zayat the more susceptible it is to manipulation or destruction, and this ongoing and unreasonable delay impedes the Chapter 7 Trustee's investigation.”

Read more at the Thoroughbred Daily News.

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On March 16, Zayat requested that a federal judge not grant his bankruptcy trustee extra time to look at his finances. This week, MGG told the court that the extra time must be allowed because Zayat, despite his “unsupported assertions of cooperation, he has done everything in his power to frustrate the process.”

Zayat declared bankruptcy in the fall of 2020, seeking Chapter 7 protection. MGG is asking a federal judge to order that Zayat can't get his debts to the investment group forgiven because the company says the $24 million in loans Zayat still owes were acquired fraudulently.

MGG's March 23 filing asserts that the Thoroughbred owner and breeder's latest action “does nothing more than establish that Ahmed Zayat is a perpetual liar determined to hinder and obstruct the Trustee, the Court and creditors at every turn.”

Read more at the Thoroughbred Daily News.

For more about Zayat and the legal issues described above, click here.

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In court documents, Zayat is claiming $19,371,466 in total liabilities versus total estimated assets of $1,892,815.

Thoroughbred trainers, horse farms, bloodstock businesses, veterinarians, and equine transportation companies are among the 132 entities listed as creditors who are due $14,755,1717 in “non-priority unsecured claims.” In his legal filing, Zayat marked most of those debts as “disputed.”

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 is appointed to liquidate assets and discharge debts.

Zayat’s family-owned racing operation, Zayat Stables LLC, is listed as a co-debtor to 112 of those 132 non-priority unsecured claims. In the filing, Zayat described his racing business as “insolvent.” He noted that a Kentucky receiver is in the process of liquidating those equine assets as a result of an ongoing $23 million lawsuit filed in January by a New York lender alleging fraud and loan defaults.

Zayat’s personal assets are primarily comprised of a single-family home in Teaneck (with adjacent unbuilt-upon lots) that has an estimated valuation of $3.55 million. His filings claim $1.775 million in equity in that property.

Zayat is claiming zero dollars in current monthly income. His filing indicates that his household’s income is entirely comprised of $13,875 in monthly wages that his non-debtor spouse earns as a speech pathologist. Two dependent children live with Zayat and his spouse. He reports monthly liabilities of $72,903 and claims to own no stocks, bonds, or pension accounts.

Five entities head the list of $4,616,294 in claims secured by the family residence via mortgages or loan agreements. Upon liquidation, they would get paid first according to Chapter 7 protocols.

The Internal Revenue Service and 12 individual state taxation agencies have the next dibs on debt as priority unsecured claimants. Each is listed as being owed “unknown” amounts.

Among the non-priority unsecured claimants who would be last to get paid (if at all) are trainers Rudy Rodriguez ($394,437), Richard Baltas ($316,070), Bob Baffert ($227,884), Brad Cox ($194,836), Todd Pletcher ($125,598), Mike Maker ($120,921) and Steve Asmussen ($102,541).

The documents state that Zayat has non-priority unsecured debts to the shipping company Brook Ledge of $164,401, and there are over $200,000 in debts from veterinary providers including Hagyard Equine Medical, Kentucky Equine Medical Associates, Kesmarc, Rood & Riddle, Stephen Selway, and Teigland, Franklin & Brokken.

By far the largest debt on the list is the $7.9 million listed for the Manhattan-based Cedarview Capital Management LP.

Zayat’s bankruptcy filing will undoubtedly have ripple effects upon the four cases of civil litigation in which he stated he or his racing company are currently defendants. The most prominent among them is the above-mentioned $23 million suit filed by MGG Investment Group, LP, in Fayette Circuit Court in Kentucky.

That lawsuit revolves around accusations that Zayat Stables hid the proceeds from the sale of nine lifetime breeding rights shares to 2015 Triple Crown winner American Pharoah, plus at least 15 other “valuable racing Thoroughbreds” held as collateral, including retired Zayat color bearers and bloodstock-rights assets Bodemeister, Eskendereya, El Kabeir and Zensational.

A hearing in that case had already been scheduled for Sep. 9, and the court overseeing that suit and the parties to it have already been notified of Zayat’s Tuesday bankruptcy filing.

Years before Zayat Stables bred and raced champion American Pharoah, Ahmed Zayat was in the news and in the courts for money troubles. In 2009, Fifth Third Bank sued Zayat for $34 million, alleging he had defaulted on loans.

That suit resulted in a 2010 federal bankruptcy court deal to repay the loans while reorganizing Zayat Stables. At the time of settlement, Zayat said in a statement that “Zayat Stables will come out of this in a stronger financial position than ever, and it will allow us to devote all of our energies to what is most important: nurturing, developing, and racing the next generation of great American horses.”

According to the U.S. Courts website, Chapter 7 bankruptcy protection provides for liquidation of a debtor’s non-exempt property and the distribution of the proceeds to creditors.

However, to qualify for Chapter 7, a debtor must first meet strict income requirements. If a debtor’s current monthly income is more than the state median, the Bankruptcy Code requires application of a “means test” to determine whether the chapter 7 filing is presumptively abusive.

If a debtor doesn’t pass the means test, filing for Chapter 13 bankruptcy could be an option. But that version pays off debt through a repayment plan over a three- or five-year period instead of via liquidation.

The court on Wednesday appointed a trustee to oversee the bankruptcy. She is Barbara Edwards, an attorney based in Fair Lawn, New Jersey.

An Oct. 5 telephonic hearing date has been set, at which Zayat is required to attend and face under-oath questioning. Creditors may attend, but are not required to do so.

The deadline for anyone wishing to object to the bankruptcy discharge or to challenge whether certain debts are dischargeable is Dec. 4.

In the Sep. 9 filing that appointed the trustee, the court added a notation that reads, “No property appears to be available to pay creditors. Therefore, please do not file a proof of claim now. If it later appears that assets are available to pay creditors, the clerk will send you another notice telling you that you may file a proof of claim and stating the deadline.”

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