(Bloomberg) — The owner of the Triple Crown-winning horse American Pharaoh filed for personal bankruptcy protection, seeking to discharge more than $19 million of debts.
Ahmed Zayat’s Chapter 7 bankruptcy case, filed in New Jersey, lists around $1.9 million of assets and $19.4 million of liabilities, most of which are business obligations, court records show. Zayat’s stables are listed as insolvent in the papers filed Tuesday.
A Chapter 7 bankruptcy allows a borrower to liquidate certain assets to compensate creditors without filing a repayment plan.
The horse owner and breeder’s attorney Jay Lubetkin didn’t respond to messages seeking comment. Zayat couldn’t be reached for comment.
The filing lists between 100 and 199 creditors, including Bob Baffert Racing Stables. Baffert trained American Pharaoh ahead of his historic victory and is owed nearly $228,000, court papers show. Baffert’s thoroughbred Authentic won last week’s Kentucky Derby.
Direct lender MGG Investment Group is also among creditors owed money. The New York-based firm lent Zayat Stables tens of millions of dollars, court documents show. MGG sued Zayat Stables earlier this year, claiming assets backing the loans — including American Pharaoh’s breeding rights — were being sold without MGG’s notice or consent.
A representative for MGG declined to comment.
Triple Crown Winner
American Pharaoh clinched the Triple Crown in 2015 at the 147th running of the Belmont Stakes. The then 3-year-old colt was the 12th horse, and first since Affirmed in 1978, to win the sport’s most celebrated title.
In 2010, Zayat put his company, Zayat Stables, into bankruptcy, blaming a court fight with Fifth Third Bancorp, which had accused him of trying to get out of a personal guarantee to repay tens of millions in loans, according to previous court papers. The filing let him shield thoroughbreds from creditors, and eventually he and the bank cut a deal to restructure the loan. Zayat agreed to sell horses over four years and give Fifth Third 40% of the proceeds.
Zayat made millions selling an Egyptian drinks company to Heineken NV, and then got into horse racing. In 2005 he set up his stables in Hackensack, New Jersey, investing $40 million and over time borrowing $34.5 million from Fifth Third.
Zayat’s personal bankruptcy shows assets from the now-insolvent stables, valued at $4 million, are being liquidated. The stables also have $22 million of secured debt and additional obligations of $4 million.
His personal assets include a home in Teaneck, New Jersey valued around $3.6 million, $300 in cash and $14.42 in two checking accounts.
The case is Ahmed Zayat, 20-20387, U.S. Bankruptcy Court in the District of New Jersey.
(Updates comment line and adds MGG Investment in sixth paragraph.)
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