Zayat Stables Emerges From Bankruptcy With a Promise to Pay 100 Percent
Zayat Stables LLC, the third-highest earner in North American thoroughbred horse racing last year, will repay creditors in full after emerging from bankruptcy.
The U.S. Bankruptcy Court for the District of New Jersey yesterday approved the company’s reorganization when creditors including Fifth Third Bancorp. voted in favor of the plan.
Zayat Stables sought protection from creditors in February after Fifth Third said it defaulted on a $34.2 million loan. Under the reorganization, Fifth Third will be paid by 2014 and unsecured creditors will get their money back over two years without interest.
“While Chapter 11 was a necessary step to take, Zayat Stables has emerged stronger and we are excited about building on our many recent successes in the racing industry,” stables owner Ahmed Zayat said in a statement.
Kentucky-based Keeneland Association Inc., which holds the world’s biggest thoroughbred auction, is owed $2.4 million, while $1.2 million will be paid to other creditors.
“Accomplishing a successful reorganization with unanimous creditor approval in less than seven months is remarkable in a case this size,” Zayat’s counsel Joseph Vann said in a statement.
Fifth Third spokeswoman Debra Decourcy didn’t immediately respond to an e-mail seeking comment.
The Stables, which said it had as much as $50 million in debt and the same amount in assets when it entered bankruptcy, earned $6.3 million from 113 wins in 573 starts last year.
The Hackensack, New Jersey-based company, formed in 2005, has 203 horses valued at $37 million. Zayat had revenue of $21 million in 2009 and the owner said in court papers he has invested $40 million in the company.
Zayat’s Pioneerof the Nile was second behind Mine That Bird in the 2009 Kentucky Derby, the first leg of the Triple Crown.
Eskendereya, another Zayat horse, was the early favorite in the 2010 Derby before being retired with a leg injury. California vintner Jess Jackson, owner of two-time Horse of the Year Curlin and reigning Horse of the Year Rachel Alexandra, purchased an interest in Eskendereya.
Ahmed Zayat made his money by purchasing Al-Ahram Beverages Co. from the Egyptian government in 1997 and selling the brewer to Heinekin NV for $287 million five years later.
His stables was third in earnings last year behind Darley Stables and Godolphin Stables.
The case is Zayat Stables LLC 10-10202, U.S. Bankruptcy Court, District of New Jersey (Newark).
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