zayat stables | Horse Racing Free Tips

Bob and Jackie Tops Keeneland Monday

A pair of racehorse prospects offered by St. George Sales late in the day were the lone lots to bring six figures during Monday’s session of the Keeneland November sale, with graded-stakes placed Bob and Jackie (Twirling Candy) (hip 3017F) bringing top price of $190,000 when selling to bloodstock agents Grey Price and Mike Recio on behalf of California owner Calvin Nguyen. Bred and raced by Zayat Stables, the 4-year-old is a three-time stakes winner and recently finished third in the Oct. 3 GII City of Hope Mile S. Bob and Jackie was supplemented to the auction and, following his quick trip to the Bluegrass, will be shipping back to the Southern California barn of trainer Richard Baltas.

“He just ran a great race in that Grade II recently and he should get better with age,” Recio said of the colt’s appeal. “He’s had a little bit of an interrupted campaign, but he’s doing great right now. Rich really loves the horse and wanted to get him back. He thinks he has a big future and Calvin is a longtime client of his.”

Recio continued, “The horse showed a lot of class. He vanned out here and he didn’t get here until seven this morning. There were a lot of hoops to jump through to get him here. He showed like a champ and did his thing. And now it’s time to go home and keep on going.”

Also supplemented to the sale, Alex Joon (Flatter) (hip 3017E) sold for $120,000 to Donald Strickand. A $250,000 Keeneland September buy in 2018, the dark bay colt won once in four starts for Zayat Stables and trainer Steve Asmussen. He was most recently runner-up in a Churchill Downs allowance Oct. 29.

During Monday’s session of the November sale, Keeneland sold 256 horses for $3,797,300. The average was $14,833 and the median was $8,000. With 36 horses reported not sold, the buy-back rate was 12.33%.

Through eight sessions, 1,768 horses have sold for $144,012,000, for an average of $81,455 and a median of $32,000.

“I think the market has been very fair,” Recio, who sells under the South Point Sales Agency banner, said. “We are very blessed that we are having sales at all. The quality has not dropped at all in price–whatever is termed quality. I think we are in a revolving door, same old same old right now. I think some people need to lighten their load broodmare-wise. Hopefully stud fees can remain neutral for a couple of years. This is a cycle and I think the market was due a dip regardless of COVID. Owners not being able to attend races and enjoy themselves probably has a little bit of an effect. And I think a lot of people are cleaning house. It’s not like any other dip we’ve had in the market. Until we can get travel back so we can get some more international flavor for the lower to middle market and even have some lighter restrictions in the U.S., I think we’re in for a hard time. I don’t think it’s going to go away right away.”

Four Star Sales purchased the highest-priced mare during Monday’s session of the November sale, going to $85,000 to secure the 5-year-old Convinced (Tiznow) (hip 2961). Out of an unraced sister to Tapit, the also unraced mare is in foal to Maclean’s Music and was consigned by Vinery Sales. A filly by Free Drop Billy, also consigned by Vinery Sales, was the session’s top-priced foal when selling for $72,000 to Spendthrift Farm, which stands her Grade I-winning first-crop sire. The weanling (hip 2656) is out of Help the Children (Stormy Atlantic).

The Keeneland November sale continues through Wednesday with sessions beginning each day at 10 a.m.

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Former Session Topper Given Away as Zayat Liquidation Continues

After nine months under court-appointed receivership to liquidate and manage its remaining equine assets, the insolvent Zayat Stables, LLC, is down to 12 remaining horses at eight locations, according to an October status report filed Nov. 11 in Kentucky’s Fayette Circuit Court.

One formerly valuable colt had to be given away during the most recent month of transactions: Lexington-based receiver Elizabeth Woodward wrote that she released the ownership of a 3-year-old Empire Maker-Duke’s Dream colt “to offset boarding, training and veterinary charges which exceeded the estimated fair market value of the horse.”

That colt was the seventh-session KEESEP sales topper in 2018, acquired for $450,000 in a partnership purchase between Zayat Stables and St. Elias Stable. The receiver’s report, however, stated Zayat Stables had 100% ownership interest in the colt at the time he was relinquished.

“He looked the part,” Zayat told TDN back in 2018 just after the hammer fell. “He was very well-balanced, he had a great walk and a great pedigree…. Everything was going for him.”

In more general terms concerning the financial state of Zayat Stables, the report stated that “As of Oct. 31, 2020, the Receiver has collected approximately $1,624,277 through the collection of purse proceeds and other funds held for Zayat Stables and from sales of the horses referenced herein. She has expended approximately $1,029,293 on operations, such as board bills, veterinary bills, and administrative fees and commissions necessary to be paid for the sales to date.”

Woodward reported the collection of $135,068 from the September sale of an American Pharoah–La Vita Bella yearling as the largest single transaction since her last report was filed with the court. That filly hammered at FTKSEP for $300,000.

Two of Zayat Stables’ horses raced in October: Bob and Jackie (Twirling Candy) ran third in the Oct. 3 GII City of Hope Mile S. at Del Mar, earning $24,000. Alex Joon (Flatter) ran second in an Oct. 29 N1X allowance at Churchill Downs, earning $9,800.

Zayat Stables was ordered into receivership back in January as part of a $24.5 million civil lawsuit by MGG Investment Group, LP, a lender alleging fraud and loan defaults by Ahmed Zayat and his family-owned bloodstock and racing operation.

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” the lender held as collateral.

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

In a federal Chapter 7 bankruptcy petition filed by Ahmed Zayat Sept. 8, Thoroughbred trainers, horse farms, bloodstock businesses, veterinarians, and equine transportation companies were among 132 entities listed as creditors. They are due $14,755,1717 in “non-priority unsecured claims,” which means they are at the bottom of the hierarchy to get paid–if they get paid at all. Zayat Stables is listed as a co-debtor to 112 of those 132 non-priority unsecured claims.

Separately, Ahmed Zayat’s former financial advisor is among the entities who initiated a Sept. 14 federal “involuntary bankruptcy” petition against Zayat’s family-owned racing stable.

Although once prevalent, involuntary bankruptcy proceedings are now relatively uncommon in U.S. 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.

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November Auction Anticipated for Zayat Horses Under Receivership

Attorneys representing MGG Investment Group, LP, which is the plaintiff in a $24.5 million Kentucky civil lawsuit alleging fraud and loan defaults against Ahmed Zayat and his family’s Zayat Stables, LLC, disclosed in a legal document filed Sept. 18 that the court-appointed receiver in that case intends to hold a November auction to sell off horses that are being held as collateral against the unpaid debts.

News about this anticipated November auction was made public in the form of a letter dated Friday and filed in United States Bankruptcy Court, District of New Jersey (Newark) by MGG’s counsel.

That letter pertains to a separate court proceeding initiated Sept. 14 by three other creditors who are attempting to force an “involuntary bankruptcy” petition against Zayat Stables. If the forced bankruptcy moves forward, it could keep MGG (and other creditors who are not part of either court action) from collecting on debts that MGG claims are backed by its own “first priority perfected security interest in all of Zayat Stables’ personal property, equine collateral, accounts and proceeds.”

Complicating matters further, Zayat himself (as an individual, not as his racing stable) filed for Chapter 7 protection Sept. 8 in a federal bankruptcy court in New Jersey, claiming to be $19 million in debt. And within that filing, the insolvent 2015 Triple Crown-winning breeder and owner disclosed that he is a party to three other active lawsuits involving money woes.

So right now the tangled financial mess involves numerous creditors jockeying for position to secure spots in a disputed pecking order that could determine which might be first to recoup proceeds from the Zayat horses held in the Kentucky receivership.

That’s important, because the federal court with jurisdiction in Zayat’s personal bankruptcy has already notified the 132 non-priority, unsecured-claim creditors in that case that “no property appears to be available to pay creditors.” So reaping proceeds from the sale of Zayat Stables’ horses appears to be the only means for some of the creditors to get paid.

The Sept. 18 letter from MGG’s attorneys was an attempt to slow down the process in the forced bankruptcy attempt. The day before, the three petitioning creditors in that involuntary bankruptcy case (Zayat’s former financial advisor is one of the parties) filed an Application for Order Shortening Time, in which they requested that an expedited hearing be set for Sept. 22.

“We are writing to request that any hearing on the Motion be scheduled for no earlier than Sept. 29 as the Petitioning Creditors have not presented any emergent circumstances that would require a hearing to be held as quickly as Sept. 22,” the MGG counsel wrote.

“The underlying premise of the Motion appears to be the Petitioning Creditors’ dissatisfaction with a Kentucky State Court receivership proceeding commenced by MGG on January 22, 2020 in the Fayette Circuit Court, in which Elizabeth Z. Woodward has been appointed receiver. The Receivership proceeding, which has been pending for almost eight months, has been heavily contested by Zayat Stables, which has not only failed in its efforts to date to get the Receivership dismissed, but has suffered the entry of judgment against it in the amount of $24,534,166.13.

“Substantially all of the ‘issues’ raised by the Petitioning Creditors in support of their Motion have already been advanced in the Receivership by Zayat Stables, to no avail.

The Receiver and her retained professionals have, under contentious circumstances, made substantial progress in monetizing Zayat Stables’ assets in a manner typical for the liquidation of equine collateral and consistent with accepted industry practices.”

The letter continued: “We are informed that the Receiver does not anticipate selling any of the horses or other components of MGG’s Collateral until a scheduled auction in November 2020, to be conducted by a recognized Thoroughbred auction house, such as Keeneland; nor will any of the proceeds of the MGG Collateral being held or to be collected by the Receiver be disbursed other than for the ordinary course care and maintenance of the Zayat Stables’ horses.

“Notwithstanding that MGG has a first priority security interest in all of the assets that the Receiver is charged with liquidating, and notwithstanding the fact that MGG has made substantial protective advances to the Receiver to preserve the MGG Collateral, MGG will not seek the Receiver make any distributions to MGG until there has been a disposition of the Motion or a further order of this Court,” the letter concluded.

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Zayat Legal Woes Continue As Creditors Force Involuntary Bankruptcy

2015 Triple Crown-winning owner Ahmed Zayat was hit with yet another legal proceeding this week, as the Thoroughbred Daily News reports a small number of Zayat creditors have initiated involuntary bankruptcy proceedings against him.

Involuntary bankruptcy actions are relatively uncommon, according to the TDN's T.D. Thornton, and are primarily designed to protect creditors who fear a debtor's assets will dwindle before they can be repaid. Thornton explains the gamble with involuntary bankruptcy filings is the filers can be required to pay the defendant's legal fees if a judge dismisses the petition.

Zayat filed for Chapter 7 bankruptcy last week, listing tens of millions of dollars in debts. A judge awarded MGG Investments a $24.5 million in summary judgment against his Zayat Stables earlier this year as part of a civil suit over a loan that went partially unpaid. Zayat has countersued and the case is ongong.

The petitioners in the involuntary bankruptcy petition include former Zayat financial advisor Steven Keefer (who Chapter 7 documents say is owed $275,000), U.S. Elite, where Keefer is CEO ($188,500), and and Joseph Bodner ($150,000).