Of that amount, only $30,000 is earmarked to eventually go to “unsecured creditors,” some of whom are Thoroughbred industry participants owed money by Zayat Stables and are much further down the legal pecking order for otherwise getting repaid.

MGG will also get a disbursement from the funds in the bankruptcy trustee's account amounting to $1,025,145.

In return, MGG–the lender that alleged Zayat and his family members obtained a $24 million loan by fraud in 2016 then never repaid it–will issue a “waiver” giving up any further pursuit of the total $27.1 million total amount it had been seeking as a secured creditor.

MGG has also agreed to return $452,500 of the settlement money it gets from the “Zayat Parties” to the trustee, which will provide for the above-mentioned $30,000 “carve-out” that gets set aside to pay unsecured creditors.

The trustee will then be permitted to use $185,981 of that MGG payment to cover “administrative obligations” that the estate has incurred.

“[E]ntry into the Settlement Agreement serves the paramount interest of the creditors of the Debtor's estate,” trustee Jeffrey Testa wrote in a July 26 series of documents filed in United States Bankruptcy Court (District of New Jersey). “Resolution of the claims by and between the Chapter 7 Trustee MGG and the Zayat Parties through the Settlement Agreement represents a successful outcome for the Debtor's creditors.”

Not every creditor is going to agree with the trustee on that “successful outcome” statement.

Drew Mollica, the attorney for New York-based trainer Rudy Rodriguez, told TDN in a phone interview that his client has an unsecured claim of $397,000, and the $30,000 set aside for all unsecured claimants amounts only to a “drop in the bucket” for what Rodriguez is owed.

“Although I don't know all of the details and I'm going to reach out to the trustee, it seems the only carve-out for anybody but MGG is $30,000, Mollica said. “And all of the other unsecured claimants are in the same boat.”

It's important to note that this involuntary bankruptcy petition involving Zayat Stables is different from the Chapter 7 personal bankruptcy claim that the allegedly impoverished breeder and owner of Triple Crown champ American Pharoah initiated Sept. 8, 2020, when he claimed to own just $300 in cash and $14.22 in two checking accounts.

Six days later, on Sept. 14, 2020, an involuntary bankruptcy petition led by Zayat's former financial advisor was initiated against Zayat's family racing business.

Involuntary bankruptcy proceedings are relatively uncommon in United States courts. They are designed to protect creditors, not debtors, and are often filed against companies (as opposed to individuals) as an attempt to get paid when it is believed that a firm is rapidly burning through assets and/or financial malfeasance is alleged.

The trustee could have elected to keep battling MGG to try and whittle down the sought-after $27.1 million. But Testa explained in court documents that the proceedings had reached a point where resistance equated to a losing proposition for the estate.

“Litigation against MGG would involve sufficiently complex legal and factual issues, particularly regarding the substance of complex loan documents and the establishment of lender liability, which would require protracted hard-fought and arduous litigation and significant expert costs,” Testa wrote.

“In addition, as a result of MGG's properly-perfected status and outstanding amounts owed to it, the Chapter 7 Trustee has no encumbered funds to fight such a taxing battle,” Testa wrote.

“As to the Zayat Parties, litigation against them would be equally challenging, demanding, complex, and come at significant additional cost and delay,” Testa wrote. “In addition, based on the litigious history of this proceeding, any judgment obtained would almost certainly be subject to an appeal.

“The Settlement Agreement avoids these obstacles in favor of a prompt and efficient resolution without the need to expend further estate resources,” Testa wrote.

Other family members of Ahmed Zayat (identified in court documents as his wife, Joanne; four children, Justin, Ashley, Benjamin and Emma, plus a brother, Sherif) are on the hook for contributing to the $5-million settlement payment because, Testa wrote, “The Zayat Parties strenuously asserted that to their detriment they provided funds to Zayat Stables in an effort to keep the entity operating [by contributing] approximately $2.5 million more to Zayat Stables than the transfers they had received from Zayat Stables.”

The proposed settlement agreement even includes a section related to who gets the trophies and other racing mementos that the trustee has been storing since their seizure from the under-receivership Zayat Stables offices.

“Zayat and several of the Zayat Parties objected to the removal of the Memorabilia based upon the position that the Memorabilia were not estate property,” Testa wrote.

The trustee added that he now considers that property “abandoned,” which likely means that Zayat can reclaim it.

“So it looks like he keeps the trophies, and the horsemen who earned the trophies get nothing,” Mollica said.

The next step in the process is for the court to approve the settlement. If other parties file an objection by Aug. 16, then an Aug. 23 hearing will take place to hear the objection(s). If no one objects, the court will enter a notice of “no objection” and the settlement will be completed as proposed.

Asked if he would be objecting on behalf of Rodriguez, Mollica said, “I'll know more after I reach out to the trustee. I'll reserve my right.”

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Zayat Stables was put under the care of a third-party receiver, and as of early 2021 was down to two horses. Zayat Stables owners Ahmed Zayat has filed for Chapter 7 bankruptcy since the start of the MGG lawsuit.

Read more at The Blood-Horse

The post Kentucky Appeals Court Upholds Dismissal Of Farms From MGG/Zayat Case appeared first on Horse Racing News | Paulick Report.

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We aren't experts on legal issues, so went to someone who is: Bob Heleringer, a Louisville, Ky., attorney and former state legislator who joins Paulick Report publisher Ray Paulick and bloodstock editor Joe Nevills to discuss the Zayat case. (Full disclosure: Heleringer said he represents trainer Rudy Rodriguez, one of several trainers to whom Zayat Stables owes money, according to court documents.)

While Heleringer's expertise is in equine regulatory law, he has some interesting comments and observations about the Zayat bankruptcy and the $23-million lawsuit filed against him by MGG Investment Group alleging fraud and breach of contract on a loan.

Joe and Ray review the performance by Jolie Olimpica, the Woodbine Star of the Week who carried the red and white Fox Hill Farm colors of the late Rick Porter to victory in last week's Grade 2 Nassau Stakes.

Watch this week's show, presented by Monmouth Park, below:

The post The Friday Show Presented By Monmouth Park: What’s The Deal With Zayat? appeared first on Horse Racing News | Paulick Report.

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Jay L. Lubetkin, a partner in the Rabinowitz, Lubetkin & Tully law firm that has been representing Zayat in both the bankruptcy and MGG adversary proceedings, filed a notice with U.S. Bankruptcy Court in New Jersey on Monday seeking to withdraw from the case.

Lubetkin said Zayat has failed to fulfill his promise to keep outstanding invoices within 60-day terms and a subsequent promise to make minimum monthly payments of $50,000. Lubetkin said he tried communicating with Zayat “at least nine times” in July to discuss the status of payments but has not received a “substantive or satisfactory response” from the Eclipse Award-winning owner and breeder who campaigned 2015 Triple Crown winner and Horse of the Year American Pharoah.

Lubetkin said Zayat currently owes $368,273.33, not including billings incurred since June 29, 2021. Lubetkin said the last payment received was May 5, with outstanding bills now dating back to February of this year.

“If (Zayat) were to satisfy his previously expressed commitment to keep our receivables within 60-day terms,” Lubetkin wrote, “it would require an immediate payment of $232,899, and a further payment of $76,717 when the billing governing July's efforts is tendered.”

Lubetkin commented that the MGG Investment Group lawsuit is “in its earliest stages” and likely would not go to trial until the second quarter of 2022, at the soonest.

Zayat's “payment failures constitute a failure to substantially fulfill obligations to our firm,” Lubetkin wrote, “and the debtor (Zayat) has been given reasonable warning that we will have no choice but to withdraw unless those obligations were fulfilled. … Additionally, continuing representation of the debtor will result in an unreasonable financial burden on our firm.”

Zayat, Lubetkin added, is “an extremely intelligent individual who fully understands the Chapter 7 bankruptcy process, the nature of the claims being made against him by MGG Investment Group in its adversary proceeding seeking the non-dischargeability of the alleged debt due MGG Investment Group, the role of his individual Chapter 7 trustee, the role of the Chatper 7 trustee for Zayat Stables LLC, the prospect of an objection to discharge complaint being filed against the debtor by his individual Chapter 7 trustee and the prospect of a Section 523 complaint being filed against the debtor by the Stables' trustee. The debtor also understands the exemption available to his interest in residential real property, the exemption available to his ownership interest in home furnishings, and the impact of the real property and personalty appraisals  obtained by his Chapter 7 trustee.

“Based on the debtor's intelligence and the detailed statutory and caselaw information which has been shared with the debtor,” Lubetkin concluded, “the debtor is fully capable of representing himself in his main bankruptcy case and in the adversary proceeding.”

The post Claiming They Are Owed $368,272, Zayat’s Attorneys Want Out Of Bankruptcy Case appeared first on Horse Racing News | Paulick Report.

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“The representation of the Debtor has consumed an extremely significant amount of the available resources of our firm,” wrote attorney Jay Lubetkin of Rabinowitz, Lubetkin & Tully, LLC, in a July 26 “motion to withdraw” filed in United States Bankruptcy Court (District of New Jersey).

“The Debtor has been consistently advised that absent satisfactory arrangements for the payment of the outstanding fees and expenses due to our firm and newly incurred billings, the firm would have no alternative but to seek to withdraw from representation of the Debtor,” Lubetkin wrote.

The purportedly insolvent owner and breeder of Triple Crown champ American Pharoah hired the firm when he filed for Chapter 7 bankruptcy protection nearly one year ago.

Lubetkin's firm has also been defending Zayat in an adversary proceeding filed against him by MGG Investment Group, LP, for allegedly obtaining a $24-million loan by fraud and then not repaying it. MGG wants that debt ruled as non-dischargeable.

Zayat's bankruptcy case has repeatedly been slowed by allegations from the trustee assigned to the case that Zayat and his family members have been uncooperative and obstructive as the trustee tries to trace millions of dollars in possibly fraudulent transfers.

Lubetkin wrote in his court filing that at the outset of their legal relationship, Zayat promised to pay what he owed in legal fees based on 60-day receivable terms. He later agreed to make at least $50,000 monthly minimum payments.

At the time of his initial bankruptcy filing in September 2020, Zayat told the court he had only $314.22 to his name.

Lubetkin wrote that Zayat has not paid his firm since May 5, 2021.

“If the Debtor were to satisfy his previously expressed commitment to keep our receivables within 60-day terms, it would require an immediate payment of $232,899 and a further payment of $76,717 when the billing governing July's efforts is tendered,” Lubetkin wrote.

“I attempted at least nine times during the month of July to communicate with the Debtor regarding status of payments to our firm, without substantive or satisfactory response by the Debtor,” Lubetkin wrote.

As for who might next represent Zayat, Lubetkin wrote in his filing that Zayat himself “fully understands the Chapter 7 bankruptcy process” and “is fully capable of representing himself.”

Lubetkin wrapped up his motion for withdrawal by noting that when he finally did manage to reach Zayat July 21, it seems as if Zayat tried to tell him he was fired before Lubetkin could quit.

“[W]hile not knowing what the Debtor's intentions were at the time of the communication,” Lubetkin wrote, “the Debtor requested that I write to the Court to advise my firm was 'no longer defending” the Debtor, which may be interpreted as the Debtor terminating his relationship with our firm.”

The post Zayat’s Bankruptcy Lawyers Want to Sever Ties Over $368K in Unpaid Fees appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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Trustee Donald V. Biase made those accusations in a memorandum in opposition to a motion by Zayat family members to block subpoenas for records from a number of financial institutions, credit card companies and even wagering accounts with TVG. The motions to quash were filed by Justin Zayat, Joanne Zayat, Emma Zayat, Benjamin Zayat and JPZ Holdings LLC.

Zayat filed for Chapter 7 Bankruptcy last September after Zayat and Zayat Stables were sued by a lender, MGG Capital Group, for defaulting on a loan. The company won a $24.5 million summary judgment against Zayat in June 2020.

Even without many of the documents requested, Biase was able to trace a number of financial transactions he found questionable between Zayat Stables and Ahmed Zayat's wife, Joanne, son Justin and other family members.

“The trustee's investigation reveals that the debtor (Zayat) and his family members have engaged in a pattern of intermingling of assets and ongoing financial transactions among themselves, Zayat Stables, LLC, and the creditors of the debtor,” the memorandum from Biase states.

Biase also raises questions about whether Zayat may have assets in his native Egypt. He cited statements from Zayat that he had sold Egypt-based Misr Glass company in 2010 or 2011 for approximately $2 million and no longer had any interest in the company. “Yet despite the trustee's request for records of this transaction, no such records have been produced to date,” the trustee wrote.

“Notably, in 2015, press reports show that Misr Glass was acquired by a third party for $93 million,” Biase wrote. “Furthermore, documents produced by Cedarview Capital Management LP … indicated that the debtor's affiliation and/or ownership of Misr Glass continued well past 2011.

“Documents obtained by the trustee from third parties strongly suggest that the debtor still possesses significant assets in Egypt,” Biase continued.

The trustee obtained a Dec. 23, 2019, communication from Zayat to a creditor stating: “Maybe it is our turn that things turn back to normalcy, and I will have the liquidity and right funds I need to manage Zayat Stables without relying on our income and ownerships on companies in Egypt that have been supporting this business.”

Another note from Zayat to a creditor on Jan. 12, 2020, stated: “I have pushed myself to the brink 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.”

Biase observed: “Given the foregoing facts, there is reason to believe the debtor still has assets in Egypt, some of which are the funds being funneled to him from the debtor's brother Sherif through accounts held in the name of JPZ Holdings (Justin Zayat's company) and Joanne Zayat.”

The post Trustee In Zayat Bankruptcy Cites Potential Assets in Egypt appeared first on Horse Racing News | Paulick Report.

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In a court order dated Mar. 31 that was filed Apr. 2 in United States Bankruptcy Court (District of New Jersey), Judge Vincent Papalia wrote that “the Trustee's time to file a complaint objecting to the Debtor's discharge is further extended…”

In the same order, the judge also denied a cross-motion that Zayat had filed Mar. 16 asking the court to put a stop to the discovery process, which is now nearing the seven-month mark since Zayat filed for bankruptcy protection.

According to documentation that Zayat filed back in September, he allegedly has $19 million in debt but only $314.22 in assets.

MGG Investment Group, LP, the lender who is separately suing Zayat and his family members for allegedly obtaining a $24-million loan by fraud and then not repaying it, told the court Mar. 23 that the trustee's probe must be allowed to go forward with the extra time granted because Zayat's attempt to put an end to the discovery process “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.”

MGG has previously asserted that loans it made in 2016 to Zayat's racing and bloodstock business were the product of years of systematic fraud that Zayat allegedly orchestrated, including Zayat Stables' desperate selling-off of equine assets that had been pledged to MGG as collateral.

Because MGG is seeking to recover that money, it does not want Zayat's debts to be declared legally forgiven under the Chapter 7 bankruptcy protection he is seeking.

MGG has specifically alleged that the trustee needs to examine bank accounts in the names of Zayat's wife (Joanne Zayat) and son (Justin Zayat) because “they appear to have been used as conduits through which Sherif El Zayat, the Debtor's brother, loaned money to Ahmed Zayat.”

Ahmed Zayat's Mar. 16 cross-motion included a letter from his attorney, Jay Lubetkin, who wrote that the trustee's request for the banking documents of family members didn't “have any apparent relevance to the Trustee's decision whether to file an objection to discharge complaint.”

Lubetkin also wrote that “The Debtor has been extremely cooperative with the Trustee [and has] provided to the Trustee significant documentation respecting his financial affairs….”

The primary role of a trustee in bankruptcy cases is to ensure that a debtor who files for federal bankruptcy protection is not hiding assets that could instead be used to pay creditors. An objection can be filed to the proceedings if a trustee believes aspects of the filing are not on the up-and-up. A judge can either dismiss a case on his own or by acting on a trustee's objection. A judge can also deny the discharge of a particular debt.

If alleged fraud is uncovered in a bankruptcy filing, the Federal Bureau of Investigation can investigate, and the U.S. Department of Justice can prosecute if it believes a crime has been committed.

The post Bankruptcy Judge Grants Extra Time to Probe Zayat’s Finances appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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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.

The post Report: MGG Asserts Zayat ‘Is A Perpetual Liar,’ ‘Has Done Everything In His Power To Frustrate The Process’ appeared first on Horse Racing News | Paulick Report.

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Now, one week later, MGG Investment Group, LP, the lender who is separately suing Zayat and his family members for allegedly obtaining a $24 million loan by fraud and then not repaying it, told the same court that the trustee's probe must be allowed to go forward because Zayat's attempt to put an end to the discovery process “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.”

MGG's Mar. 23 filing in United States Bankruptcy Court (District of New Jersey) is rooted in the New York-based lending company's desire not to have Zayat's debts declared legally forgiven under the Chapter 7 bankruptcy protection he is seeking.

MGG has previously asserted in court that loans it made in 2016 to Zayat's racing and bloodstock business were the product of years of systematic fraud that Zayat allegedly orchestrated, including Zayat Stables' desperate selling-off of equine assets that had been pledged to MGG as collateral.

“There is only one reason the statutory meeting of creditors commenced in this
Case…has been kept open and must remain open—namely, notwithstanding Ahmed Zayat's unsupported assertions of cooperation, he has done everything in his power to frustrate the process,” MGG wrote in its objection to Zayat's recent cross-motion to move the case toward conclusion.

MGG's filing continues: “Far from being the 'honest but unfortunate debtor' that the Chapter 7 process aims to protect, Ahmed Zayat has demonstrated time and again that his ultimate goal is to manipulate the bankruptcy process to shield himself at the expenses of the Trustee and creditors.”

According to MGG, since Zayat filed for bankruptcy protection back in September, he has delayed the administration of his case by 1) Refusing to produce documents prior to the initial hearing; 2) Refusing to respond to “numerous questions” on the basis that he did not have the necessary documents in front of him; 3) Promising, then subsequently refusing, to produce requested materials; 4) Providing paperwork that was so heavily redacted that the documents made no sense.

“Ahmed Zayat should not be able to impede the Trustee's analysis or derail his investigation, all of which is being conducted for the ultimate benefit of the Debtor's creditors,” MGG wrote.

The primary role of a trustee in bankruptcy cases is to ensure that a debtor who files for federal bankruptcy protection is not hiding assets that could instead be used to pay creditors. An objection can be filed to the proceedings if a trustee believes aspects of the filing are not on the up-and-up. A judge can either dismiss a case on his own or by acting on a trustee's objection. A judge can also deny the discharge of a particular debt.

And if alleged fraud is uncovered in a bankruptcy filing, the Federal Bureau of Investigation can investigate, and the U.S. Department of Justice can prosecute if it believes a crime has been committed.

MGG wrote that in addition to supporting the trustee in his request for one more month to sift through documentation, the lender also wanted to “advise the Court of significant recent developments” that arose out of Zayat's testimony under oath at a Feb. 25 hearing.

Specifically, MGG alleged, documents pertaining to bank accounts in the names of Zayat's wife (Joanne Zayat) and son (Justin Zayat) are now “indisputably relevant to the Trustee's investigation and analysis, as they appear to have been used as conduits through which Sherif El Zayat, the Debtor's brother, loaned money to Ahmed Zayat.”

Last week, Ahmed Zayat's cross-motion included a letter from his attorney, Jay Lubetkin, who wrote that the trustee's request for the banking documents of family members didn't “have any apparent relevance to the Trustee's decision whether to file an objection to discharge complaint.”

Lubetkin also wrote Mar. 16 that “The Debtor has been extremely cooperative with the Trustee [and has] provided to the Trustee significant documentation respecting his financial affairs…. The Debtor has responded with voluminous documents in satisfaction of the Trustee's three very extensive document requests, and temporarily withheld only a small portion of those documents for legitimate, good faith, objectively supportable reasons…The Debtor [eventually] provided the Trustee with the temporarily withheld documents, and the Trustee has been in possession of all the requested documents for more than 60 days.”

MGG wrote in its Mar. 23 filing that “Ahmed Zayat has attempted to create a record based on false and misleading assertions.”

MGG's filing contained excerpts from email exchanges between Ahmed Zayat and MGG that date to Jan. 12, 2020, which was 10 days before MGG filed its bombshell lawsuit against him in a Kentucky court.

“It kills me and tore me part, not being transparent with you,” Zayat allegedly wrote at the time, apparently in an effort to stave off the impending legal action.

“I did not disclose to you why we had to sell some assets in order for us to fund and continue to operate Zayat Stables and allowing myself the time to find the capital to get you paid in full…. I did not want you to panic knowing that I still have a chance to save the day…

“There is still a glimpse of light that a miracle can happen,” Zayat allegedly wrote.

The post MGG to Bankruptcy Judge: ‘Zayat Is a Perpetual Liar Determined to Hinder and Obstruct’ appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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“The indebtedness owed by Ahmed Zayat to MGG is non-dischargeable as it is a debt for money, property, services, or an extension, renewal, or refinancing of credit, that was obtained by false pretenses, false representations and/or actual fraud within the meaning of Bankruptcy Code Section 523(a)(2)(A),” MGG stated in a Dec. 4 complaint filed in United States Bankruptcy Court, District of New Jersey.

“[I]t is a debt…that was obtained by use of a series of statements in writing that were materially false, respecting an insider’s (Zayat Stables) financial condition, on which MGG reasonably relied, and that Ahmed Zayat caused to be made or published with the intent to deceive MGG,” the complaint continued. “[I]t is a debt for willful and malicious injury caused by Ahmed Zayat to the property of MGG within the meaning of [the] Bankruptcy Code.”

The specifics of MGG’s fraud allegations against Zayat are not new. They were just introduced in a different court in a different legal context.

In fact, the “adversary proceeding” that MGG filed Dec. 4 covers the nearly identical timeline of alleged deceit and evasion involving racehorses and bloodstock between 2016 and 2020 that MGG first brought to light in January in its Kentucky lawsuit in Fayette Circuit Court.

That case revolves around accusations that Zayat 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” that had been pledged to MGG as loan collateral.

Also Dec. 4, in a separate status report filing related to that case, the court-appointed receiver who has been managing and liquidating Zayat Stables reported that the operation is down to just three remaining horses after nine sold at public auction in November, grossing $566,000.

The MMG suit is one of at least three intertwined and currently active court cases involving Zayat and his racing stable.

Separately, in a federal Chapter 7 bankruptcy petition filed Sept. 8 by Zayat himself, horse farms, trainers, bloodstock businesses, veterinarians and equine transportation companies were among 132 entities listed as creditors.

Zayat stated they are due $14.7 million in “non-priority unsecured claims,” which means they are at the bottom of the hierarchy to get paid–if they get paid at all–if the plea for bankruptcy protection gets granted. This is the bankruptcy case that MGG is now trying to influence with its Dec. 4 adversary proceeding.

Complicating matters further, Zayat’s personal voluntary bankruptcy pleading is different from a separate involuntary bankruptcy petition that Zayat’s former financial advisor and other entities initiated against his racing stable Sept. 14.

Involuntary bankruptcy proceedings are relatively uncommon, and are generally designed to protect creditors as opposed to debtors. Involuntary bankruptcies are often filed against companies (as opposed to individuals) as an attempt to get paid when it is believed that a firm is rapidly burning through assets and/or financial malfeasance is alleged.

MGG’s Dec. 4 complaint pertaining to Zayat’s Chapter 7 petition demanded entry of a judgment declaring that he “is personally liable for all of the indebtedness owed to MGG under the Loan Documents in an amount to be determined by this Court and that such indebtedness owed by Ahmed Zayat is determined to be nondischargeable pursuant to [the] Bankruptcy Code [while] awarding MGG such other and further relief as this Court deems appropriate.”

The filing continued: “For several years, Ahmed Zayat’s fraudulent scheme worked for his benefit. In light of the fraudulent sales of MGG’s Equine Collateral, the concealment of sales revenue relating thereto, the manipulation of accounts payable, and the nondisclosure of Defaults and Events of Default under the Loan Documents by Zayat Stables…MGG was intentionally deceived and kept ‘in the dark…’

“As a result, MGG was defrauded of the opportunity to accelerate its Loans at or before the time when these fraudulent actions were occurring, thereby enabling Ahmed Zayat to continue to orchestrate the wrongful sale of additional Equine Collateral and further deprive MGG of the ability to insure that such sales realized fair market value and that the proceeds thereof were applied in accordance with the Loan Documents.”

MGG’s Dec. 4 filing also stated that “This Complaint is not intended to supersede or modify any of MGG’s claims against Ahmed Zayat or any other party asserted in the Kentucky [lawsuit]….

“Pursuant to this Complaint, MGG is setting forth the grounds on which it objects to the dischargeability of debts owed by Ahmed Zayat to MGG, and is preserving its right to have the claims against Ahmed Zayat set forth in the Kentucky [lawsuit] consolidated with the claims set forth herein at such time as the issues relating to the Kentucky [lawsuit] are ripe for further discussion by this Court.”

The post MGG Wants Zayat Debt Ruled ‘Non-Dischargeable’ Because of Alleged Fraud appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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