Zayat Stables in Receivership: What Exactly Does That Mean?


Zayat’s American Pharoah | Sarah Andrew


Additional reporting by Lucas Marquardt

When the assets of Zayat Stables, LLC, were ordered into receivership by a Fayette Circuit Court judge in Kentucky on Wednesday as part of a $23 million lawsuit by a lender alleging fraud and loan defaults, the judgment caused reverberations within the Thoroughbred bloodstock and racing world beyond those felt by Ahmed Zayat and his family. (Click here to read the TDN story.)

Specifically, questions began to swirl about what would happen to the Zayat horses either at farms or currently in training in New York, Florida, California and Arizona, and what might be the responsibilities of horse industry people and firms hired by the 2015 Triple Crown-winning owner to take care of those animals.

TDN has obtained the court order signed by judge Kim Bunnell that details exactly what receivership entails in this complex case, and an outline of the responsibilities of both the receiver and affected parties follows.

The plaintiff, MGG Investment Group, LP, had requested receivership as part of its civil suit against Zayat. The court granted this request, and the appointed receiver is Lexington-based Elizabeth Woodward, the director of forensic accounting and litigation support for Dean Dorton, one of the largest certified public accounting firms in Kentucky.

At a $365 hourly fee, Woodward has been authorized by the court to “take charge of, operate, preserve, maintain and care for all of the assets of the defendant, Zayat Stables, including, but not limited to, all horses, breeding rights, files, papers, records, documents, insurance policies, monies, securities, bank accounts, books of account, and all other Property, real or personal.”

It appears as if a distinct element of wanting to preserve day-to-day operations has been written into the order. There is no mention of liquidating assets in the form of selling horses.

The receiver “may contract and pay for routine and ordinary items pertaining to the Property and not involving expenditures of a capital nature or otherwise outside of the ordinary course of the business of the operation and management of the Property” and “may pay all other expenses required in order to preserve and operate the Property during the pendency of this action, including borrowing money to do so, provided the payment of such does not involve expenditures of a capital nature or is otherwise outside of the ordinary course of the business operation and management of the Property.”

As the process begins for the receiver to initiate contact with Zayat’s employees and trainers, the order states that the receiver “may provide a copy of this Order to anyone who may be affected by its terms and provisions” and that “the receiver shall undertake only those actions which are reasonably calculated to benefit the Property and which manifest fair dealing with respect to the Property.”

A section of the order that outlines “Instructions to Third Parties” states that “The Defendants shall instruct all third parties to make payments of rents or accounts directly to the Receiver, and shall not instruct any third party to make payments of rents or accounts other than to Receiver without the prior written order of the Court.”

Any “agents, employees or representatives” of Zayat are “ordered to and shall pay over, surrender and deliver to Receiver: all books, records, accounts, papers, monies, and all other assets of Zayat Stables, including all evidence of indebtedness, and all monies and other assets, which are held or purported to be held by Zayat Stables.”

One horse-specific reference in the order states that affected third parties must provide “a certified list of all [Zayat] horses and all Jockey Club Certificates; all active files pertaining to vendors, employees, trainers or other persons or entities supplying services to the Property.”

As of deadline for this article, Ahmed Zayat has yet to respond to a detailed voice message left by TDN on Wednesday night asking for his side of the story.

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