Zayat Discharge Granted, but Credit Problem Persists

A discharge in bankruptcy was granted to Ahmed Zayat late last week by the U. S. Bankruptcy Court for New Jersey, but legal and financial issues still loom.

The bankruptcy case, which is more than two years old and is still not administratively closed, appears to be over for Zayat, who bred and campaigned 2015 Triple Crown champion American Pharoah  . A discharge generally frees the debtor from paying pre-bankruptcy debts.,

However, debts secured by collateral such as real estate have their own set of rules. A motion that would enable a mortgage holder to seek foreclosure on the New Jersey residence owned by Zayat and his wife Joanne has loomed in the background of the case most of this year.

According to court filings, Zayat has plunged almost $360,000 behind on a mortgage note owed to Wilmington Savings Fund since March 2021. The Zayats agreed to a Consent Order entered four days before the bankruptcy discharge that lays out a roadmap to get current.

Under the terms of the order, the Zayats, starting Nov. 1, must make regular monthly mortgage payments of $19,154.73 and pay an additional $10,845.27 each month until the arrearage is extinguished.

The order says if any payment due hereafter becomes more than 30 days late, the mortgage holder may pursue its rights in state court, which would include foreclosure. According to the terms of the Consent Order, now that a discharge has been granted to Zayat the mortgage holder need not seek permission from the bankruptcy court to enforce its rights.