Zayat Critical of Firm's Effort to Reacquire Assets

Owner/breeder Ahmed Zayat sharply criticized recent efforts by New York-based investment firm MGG to acquire horses and breeding rights the company contends Zayat sold fraudulently, violating the terms of loan agreements his Zayat Stables had with MGG.

"We are disappointed but not surprised at MGG and Kevin Griffin's aggressive attack on the horse industry," Zayat said in a Feb. 13 statement distributed by attorney Andrew Brettler with the Lavely & Singer law firm in Los Angeles. "Zayat Stables said from the beginning that it wanted to liquidate certain assets to generate enough proceeds to pay off all of its creditors. Motivated purely by self-interest and greed, MGG, however, was more interested in litigating this dispute at the expense of other creditors. MGG has gone as far as filing baseless claims against reputable horse farms and bloodstock agents."

In an amended complaint filed Feb. 11 with the Fayette Circuit Court Division 9, MGG is arguing it is entitled to the ownership of nine breeding rights to American Pharoah and horses sold between September 2017 and December 2019 who had been included in the collateral for tens of millions of dollars in loans from MGG to Zayat Stables. The breeding rights were purportedly sold collectively for $3.3 million between December 2018 and June 2019, with two rights sold to LNJ Foxwoods and seven to Orpendale, an entity associated with Coolmore and Ashford Stud, where American Pharoah stands. The complaint also argued for the return of stallions El Kabeir, who was purportedly sold to Yeomanstown Stud in Ireland, and Solomini , who was sold to McMahon of Saratoga Thoroughbreds. Other horses reported in court documents as sold by the Zayats include grade 1-placed mare American Cleopatra and race mares Lemoona and Amandrea.

"This conduct demonstrates MGG's fundamental lack of knowledge of the horse industry and complete lack of respect for the parties essential to its success," Zayat continued in his statement. "Zayat Stables is doing everything it can to ensure that all of its debts are repaid, but MGG has placed itself above all others and has made it nearly impossible for other creditors to be treated fairly."

Zayat Stables is now under the supervision of court-appointed receiver Elizabeth Woodward, the director of forensic accounting and litigation support at the Lexington accounting firm Dean Dorton. MGG has requested in its complaint that the ownership of the horses and the nine breeding rights be transferred to MGG and that all proceeds an entity receives from the sale of progeny from the mares or the breeding rights be held in a trust for the benefit of MGG.

Woodward issued her own statement Feb. 12, saying that while she and her consultant Gatewood Bell were notified when MGG amended its complaint, she takes no position on any issues raised in the court filings.

"The Circuit Court's order appointing the receiver directs her to take possession of the collateral and maximize its value, which is the work she is doing. The receiver works for and reports to the Court, not MGG, or any other party," read Woodward's statement.