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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“[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,” read a complaint filed by MGG. “[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.”

MGG's suggestion that Zayat was dishonest in his representations to the company isn't new; the basis for its much-publicized suit against Zayat in Fayette Circuit Court in Kentucky is based partly on allegations that Zayat failed to disclose the sale of nine breeding rights to American Pharoah or turn over the proceeds to the lender.

Read more at Thoroughbred Daily News

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Unlike Chapter 13 or 11 bankruptcy, Chapter 7 does not involve the filing of a repayment plan. Rather, a bankruptcy trustee is appointed to gather and sell assets and pay creditors when possible. Some of the debtor's property may be exempt, but anything nonexempt will be liquidated.

A lengthy list of creditors attached to the filing revealed a number of horse trainers owed amounts in the six figures, among them Bob Baffert, who is owed $227,884.17, Brad Cox ($194,836.19), Mike Maker ($120,921.88), Richard Baltas ($316,070.12), Steve Asmussen ($102,541.10) and Todd Pletcher ($125,598.69). Rudy Rodriguez, who was awarded a judgment by a New York court for $394,437.19, is also listed. Jorge Navarro's JN Racing is owed $63,822.01.

Veterinary hospitals Hagyard Equine Medical ($38,999.53), Rood and Riddle ($54,346.77), and Kentucky Equine Medical Associates ($19,937.32) are also on the list, as are numerous therapists, individual veterinarians, van companies, and others.

Several financial advisement companies and individuals are listed, with notes they are owed six or seven figures each. One $250,000 debt is listed for the PMG Operating Account, whose address corresponds to Meadows Gaming.

Some, though not all, of these creditors' claims are marked as disputed.

Zayat and his racing operation were named in a civil lawsuit earlier this year 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 earlier this year, representing the remaining balance Zayat Stables owes on the loan. Zayat Stables has countersued, and the bankruptcy paperwork listed the final amount owed to MGG as unknown for the moment. Control of Zayat Stables has been placed into the hands of a court-appointed receiver, who has raced a few of the stable's remaining horses and sold many of them, with an aim to maximize profit in the court of liquidating the operation.

Cedarview Capital, a New York hedge fund, is owed $7.9 million. In documents filed as part of the MGG suit, Zayat indicated he had paid over $1 million in interest to Cedarview, and stated it was one of the lenders he took on alongside MGG. In emails dated January of this year, Zayat claimed to have traveled to China in an attempt to attract investors to inject cash into the stable in order to “make the company fiscally functional” and to repay MGG and Cedarview.

In 2009, Zayat Stable filed for Chapter 11 bankruptcy protection after Zayat was sued by Fifth Third Bank for allegedly defaulting on $34 million in equine loans.

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Elizabeth Woodward, director of forensic accounting and litigation support at Dean Dorton Allen Ford, was appointed by a Fayette Circuit Court in January to manage the stable's assets. This primarily involves selling horses at public auction or overseeing the continued racing careers of some in hopes of increasing their value. As news spread earlier this year of the suit, which is based on more than $24 million in loans MGG claims Zayat Stables did not repay, other creditors began to emerge

Ten days after his arrest by the Federal Bureau of Investigation, Navarro informed Woodward through attorney Bradford Beilly he planned to sell the horses to pay off the debt, which he claims exceeds $51,000.

“Contemporaneously with sending its Claim Notice, Navarro transported the Zayat Horses to an undisclosed location, without notice or permission from the Receiver, and in direct violation of the [Court] Order on or around March 19, 2020,” read Woodward's motion. “Escalating the conflict, on April 7, 2020, Navarro then scheduled a public sale for April 17, 2020 … Though it was unclear how Navarro could hold a commercially reasonable public sale as required by Florida statute at a time in which the state was closed for commerce by executive order and the horses themselves were secreted away to an unknown location, the Receiver took immediate steps to stop the proposed sale.”

Woodward secured a bond for the amount Navarro claimed he was owed and secured the horses nine days later and sold them at the Fasig-Tipton July Horses of Racing Age Sale for a combined $112,000.

Because of the specific expenses allowed and disallowed by Florida laws governing liens, Woodward now says the stable owes Navarro less than he claims. Previous findings in the case suggest the receiver isn't subject to bills incurred by the stable under Zayat's control, and only certain types of expenses such as feed and stabling (but not training) are permitted for agister's liens in Florida, according to Woodward's motion.

Rudy Rodriguez was awarded a $394,437.19 judgment for unpaid training bills by a New York court, and is hopeful he can collect his money before MGG is paid back from proceeds of sales or race purses by Zayat horses.

In other news related to the case this week, Judge Bunnell dismissed with prejudice MGG's claims against Bemak International, which facilitated a sale of American Pharoah breeding rights from the Zayat family to Orpendale. MGG is appealing that dismissal.

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Rodriguez won a judgment against Zayat Stables in a New York court in late 2019 for $394,437.19 in unpaid training bills that his legal team says went back years.

MGG had objected to the motion before Judge Kimberly Bunnell, questioning whether the two cases had enough in common to be combined. After all, the company argued, Rodriguez had a judgment in his favor from a New York judge, but had nothing to do with the loan Zayat took out from MGG in 2016.

“Zayat Stables undoubtedly owes a lot of money to a lot of people,” read paperwork filed by MGG ahead of the judge's order to consolidate. “Allowing Rodriguez Racing into the case will only open up Pandora's box and cause all of Zayat Stables' other creditors to come out of the woodwork to join this case, regardless of the irrelevance of their claims to the matters before the Court in this case.”

Attorneys for Rodriguez Racing disputed that assertion and pointed out that in one monthly report alone, over $137,000 had been paid to creditors of Zayat Stables by the receiver in charge of winding down the Zayat Stables operation.

Rodriguez no longer trains horses for Zayat, according to court filings. In mid-October 2019, he alleged the stable owed him more than $600,000 in unpaid bills, and filed an agister's lien on Lezendary and Majid, the two Zayat horses still in his possession at the time. Justin Zayat, son of Zayat Stables founder Ahmed Zayat, told media the two sides had come to an agreement over the amount owed.

“He's a wealthy man. I'm a working guy,” Rodriguez said at the time. “It costs me a lot to run the stable, with salaries and workers' compensation. Whenever I talk to him, he says he's going to pay, he's going to pay. I told him, 'I can't carry you anymore.'”

Ahmed Zayat would later announce in a tweet in late October that Rodriguez was “back on the team,” showing Rodriguez with Ahmed and Justin Zayat in what would seem to be the Zayat Stables offices in New Jersey. That tweet has since been deleted.

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