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Ahmed Zayat’s $19 million bankruptcy continues to be a first-class mess.
Thoroughbred Daily News reports that the law firm representing Zayat asked a federal judge on Monday to sever ties with Zayat for allegedly failing to pay $368,273 in legal fees.
“The representation of the Debtor has consumed an extremely significant amount of the available resources of our firm,” wrote attorney Jay Lubetkin of Rabinowitz, Lubetkin & Tully, LLC, in a July 26 “motion to withdraw” filed in United States Bankruptcy Court (District of New Jersey).
“The Debtor has been consistently advised that absent satisfactory arrangements for the payment of the outstanding fees and expenses due to our firm and newly incurred billings, the firm would have no alternative but to seek to withdraw from representation of the Debtor,” Lubetkin wrote.
Zayat hired the firm when he filed for Chapter 7 bankruptcy last September when he was sued by lender MGG Capital Group for defaulting on a loan. MGG Capital won a $24.5 million summary judgment against Zayat in June 2020.
Zayat Stables owned 2015 Triple Crown winner American Pharoah, the first colt in 37 years to win the Kentucky Derby, Preakness Stakes and Belmont Stakes. American Pharoah finished his career by winning the 2015 Breeders’ Cup Classic at Keeneland. He now stands at Coolmore’s Ashford Stud in Woodford County.
Zayat’s financial problems came to a head in January of 2020 when the New York financial group accused him of selling breeding shares to American Pharoah that were being used for collateral on outstanding debts.
Earlier this month, the bankruptcy trustee alleged in court documents that Zayat and his family are using “gamesmanship, obstruction and delay” to avoid handing over financial documents.
In April, trustee Donald Biase alleged that Zayat transferred $200,000 just before filing for bankruptcy.
In March, MGG issued a court filing asking a judge not to grant Zayat the additional time he had requested to prove his inability to pay his debts. In the filing, MGG called Zayat “a perpetual liar determined to hinder and obstruct the Trustee, the Court and creditors at every turn.”