Zayat Issues Statement on Maker Lawsuit

Owner Ahmed Zayat has issued a statement calling a lawsuit filed Jan. 30 on behalf of trainer Mike Maker "absurd" and "outrageous."

The complaint filed by Maker's attorneys Thursday in Jefferson County (Ky.) Circuit Court sues Zayat for breach of contract and fraud and seeks damages including more than $120,000 the trainer says the prominent Thoroughbred owner and breeder owes his operation.

Zayat is also being sued in a separate case filed Jan. 21 in Fayette County (Ky.) by MGG Group, a New York-based investment firm seeking at least $23 million in damages. An emergency hearing conducted Jan. 22 in connection with that case resulted in Fayette County Judge Kim Bunnell ordering a receiver to oversee Zayat Stables, including all of its horses. 

Elizabeth Woodward, the director of forensic accounting and litigation support at the Lexington accounting firm Dean Dorton, was appointed as receiver in the case.

Zayat Stables filed a motion Jan. 27 asking the court to modify the order, requesting the right to "liquidate the collateral at issue rather than granting the receiver the broad rights to take over all operations of the company."

A hearing on that motion is set for Feb. 6, according to Zayat.

MGG claims that Zayat Stables defaulted on a loan from MGG and has sold assets, including breeding rights to 2015 Triple Crown winner American Pharoah  that were being held as collateral against the loan, and that the receivership was necessary to protect its interests in the Zayat holdings. 

Among Woodward's duties are 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."

Maker's lawsuit states that Zayat defaulted on a settlement agreement made in September 2019 to address overdue bills and claims the defendant "knew that its financial situation was untenable and that Zayat Stables was in fact insolvent and unable to pay its creditors, including Maker. … Defendants had no intention of honoring the settlement agreement, as the defendants had already notified other creditors of their insolvent status and, according to published reports, begun to liquidate assets without notifying creditors."

In a statement released Feb.1 by Zayat's legal counsel, the owner refutes the claims.

"This lawsuit from Mike Maker is absurd," the statement read. "Ahmed Zayat made all payments required under his prior settlement with Mr. Maker until MGG seized control of Zayat Stables' bank account last month. It is outrageous for Mr. Maker to cry foul given that he agreed to the terms of the workout, which Mr. Zayat has fully honored in an effort to keep his business afloat and repay each of his creditors. To suggest he's done anything less and accuse Mr. Zayat of fraud is scurrilous and defamatory.

"Mr. Zayat fully expects this lawsuit will be dismissed and intends to seek appropriate sanctions against Mr. Maker for pursuing this malicious action."

Maker dismissed Zayat's comments, saying the owner had not paid him for what he was owed, nor kept him abreast of when to expect payment. Maker also said his most recent payment from Zayat Stables was due Jan. 15, before Zayat Stables was placed into receivership.

"If he is so honorable, why didn't he call his creditors?" Maker said. "Say, 'Because of this receivership, we have no more (funds) coming out.' That would have been the honorable thing to do. Say, 'Hey, I'm sorry,' instead of not contacting someone."