Bankruptcy Court Approves Settlements in Zayat Cases

According to online court records, the U.S. Bankruptcy Court for New Jersey approved motions Aug. 23 for settlement and compromise of claims filed by trustees in the bankruptcy cases of Ahmed Zayat and Zayat Stables, ending disputes in major portions of the cases.

Donald Biase, trustee of the Zayat personal bankruptcy case, gave notice of the details contained in his intent to settle in early June.

 A similar notice was filed in late July by trustee Jeffrey Testa in the Zayat Stables case following a mediation that involved the operation's largest creditors, MGG Investment Group and affiliated companies. No objections were filed in either case, according to certificates filed in the cases. The settlements were approved by Judge Vincent F. Papalia.

The Biase settlement in the Zayat personal case was previously set for an approval hearing July 19 but was postponed to allow the opportunity for a more global settlement involving a tangle of claims in the Zayat Stables case, where more than $6.5 million will change hands in the settlement.

Resolution of the claims does not necessarily put an end to all of Zayat's legal issues, but it laid to rest many of them for the man who campaigned homebred and champion American Pharoah   to victory in the the 2015 Triple Crown and Breeders' Cup Classic (G1).

The only loss suffered by the son of Pioneerof the Nile, aside from his debut, was a second-place finish to Keen Ice in the 2015 Travers Stakes (G1). With nine wins from 11 starts for trainer Bob Baffert, American Pharoah earned $8,650,300; more than the cumulative funds involved in the settlements made by the bankruptcy trustees and MGG with Zayat and members of the Zayat family.

Baffert himself fell from grace after the 2021 Kentucky Derby Presented by Woodford Reserve (G1) when his trainee and the race winner, Medina Spirit, tested positive for a substance stewards determined was not permitted on race day. A hearing on the appeal filed by owner Amr Zedan and Baffert is taking place this week before the Kentucky Horse Racing Commission.

Both Zayat cases were chapter 7 liquidations filed in fall 2020. However, they were not the first taste of that setting for the native of Egypt, who filed chapter 11 bankruptcy in 2010 following a dispute with creditor Fifth Third Bank. About 100 creditors were listed in the 2010 filing; about 150 were listed in 2020.

The 2010 case was closed about a year after it was filed following court approval of a Chapter 11 reorganization plan.

American Pharoah was foaled the following year, leading Zayat to dizzying heights in the Thoroughbred industry with the first Triple Crown winner in 37 years before the reversal and collapse of his fortunes a few short years later.