Even when the fraud lawsuit was imminent, Zayat now claims that global companies wanted to invest hundreds of millions


Ahmed Zayat, the financially embattled thoroughbred breeder and owner whose insolvent businesses are currently being examined in three intertwined legal cases, revealed in an otherwise routine bankruptcy filing Tuesday before he was sued for alleged fraud. and loan default last year, he had lined up at least two global investment partners supposedly willing to inject hundreds of millions of dollars into his failed race and blood operation.

In particular, Zayat claimed that he had come tantalizingly close, just days away, to obtaining a $ 100 million “capital injection” from an undisclosed entity in China that would have prevented New York-based MGG Investment Group, LP. , sue him and other Zayat. Family members after her cash-strapped racing stable failed to repay loans and allegedly hid and forged assets.

Zayat later stated that the “extremely aggressive and very expensive” nature of defending himself against that lawsuit is what forced him to seek Chapter 7 bankruptcy protection last September.

Within that March 16 document that is intended to expedite Zayat’s personal bankruptcy case (now past the six-month mark in federal court in his home state of New Jersey), the breeder who competed with him 2015 Triple Crown champion American pharaoh detailed a new timeline suggesting that even as his financial world was imploding in January 2020, Zayat traveled the globe in a desperate effort to obtain fresh funding to get out of MGG’s $ 35 million loan.

But that hastily arranged deal never came in time to prevent MGG from filing the lawsuit that forced its thoroughbred stable into court-ordered liquidation, according to the version of events Zayat witnessed in his cross move.

“When MGG filed its lawsuit in Kentucky, I was looking [Zayat] It establishes a capital injection of $ 100 million from the Asian markets, ”stated Zayat in the presentation. “I attended a tour in China from January 5, 2020 to January 10, 2020, to pursue that injection of capital. MGG filed a lawsuit on January 17, 2020. If MGG had not filed its lawsuit in January 2020, it is most likely that the capital increase would have been consummated, which would have resulted in MGG’s full payment.

“MGG encouraged me to continue that capital injection while secretly preparing the Kentucky lawsuit and intended to deplete {Zayat]Stables’s bank account,” Zayat alleged.

In a different section of the same document, Zayat claimed that MGG “fraudulently induced Stables into a loan involving a discretionary portion of $ 10 million, never loaned the full $ 35 million to Stables that was required, and admitted that it never intended to to loan Stables the total of $ 35 million. “

Zayat stated that the money he sought in 2016 from MGG was intended to be a “bridge loan” because Zayat believed he had a bigger deal in the works with CVC Capital Partners, which describes itself as “a world leader in equity. private and credit “seeking to partner with” fundamentally sound, well-managed and cash-generating businesses. “

“At the time of the negotiations with MGG, [Zayat] Stables had a term sheet from CVC, one of the largest private equity firms in the world, to inject $ 250 million of capital into Stables for a 49% stake, ”Zayat stated in the court document. “Therefore, the intention was for Stables to use MGG’s $ 35 million as a bridge loan until a capital injection transaction could be consummated.”

But that deal also failed.

The proposed partnership between Zayat and CVC would have fallen apart in late 2016 or early 2017. According to a different timeline of events set out by MGG in their lawsuit, it is roughly the same time frame that Zayat and the members of the family allegedly began selling horses and stocks. in breeding rights while telling MGG that those equine assets remained on the books as collateral against the loans.

While Zayat’s two near-unsuccessful investment disclosures will make headlines within the thoroughbred industry, it’s unclear what they are for in relation to the paperwork his legal team filed Tuesday. The March 16 filing is essentially a request for the trustee and creditors to stop questioning you about financial details so that the bankruptcy proceedings can be concluded.

“The Debtor has been extremely cooperative with the Trustee,” wrote Zayat’s attorney, Jay Lubetkin, in an explanatory letter accompanying the crossed motion. “The Debtor provided the Trustee with important documentation regarding its financial affairs…. The Debtor has responded with voluminous documents in satisfaction of the Trustee’s three very lengthy document requests, and temporarily withheld only a small portion of those documents for legitimate, good faith and objectively supportable reasons …

“The debtor [eventually] provided the Trustee with the temporarily held documents, and the Trustee has been in possession of all requested documents for more than 60 days. The Trustee has personally inspected the Debtor’s home with a real estate broker and [an] appraiser for more than two hours, more than three months ago. “

Lubetkin wrote that Zayat and family members are now being asked to turn over another round of detailed financial documents, “none of which have any apparent relevance to the administrator’s decision to file an objection to the discharge complaint.”

Lubetkin summarized by writing that “In a further showing of good faith, the Debtor was willing to consent to a brief extension of the Trustee’s term to file an objection to the discharge of the complaint, if the Trustee agreed to limit the continuing meeting of creditors to a additional hour. Even that reasonable proposal was rejected by the Trustee. For the above reasons, and for those established in the Supporting Certification, the Debtor respectfully requests that the Court issue an Order denying the Trustee’s additional request for an extension of the deadline for the discharge objection and forcing the Trustee to consider the meeting concluded. creditors. . “

Based on the crossover move, additional items the trustee has recently requested include a list of transactions from Zayat’s TVG gambling account and his 2016 credit card statements.

“Calendar year 2016 was the period immediately following the success of the Triple Crown winning horse American pharaoh, and it doesn’t show, and it can’t be shown,

that I was under some personal financial problem during that period of time, ”stated Zayat.

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