Fifth Third Bank is trying to force Thoroughbred owner Ahmed Zayat to put up more collateral or cash — or sell his horses.
The bank has filed a motion in the Zayat Stables bankruptcy case opposing the use of $600,000 in cash collateral in a Fifth Third account to keep the stable running. Fifth Third does not comment on litigation.
The federal bankruptcy court in New Jersey has allowed Zayat to use as much as $1.04 million to continue operating until a hearing scheduled for March 8. The bank, which alleges Zayat defaulted on $34 million in loans, said Zayat's stable "continues to incur staggering cash losses."
Zayat's 200-plus racehorse stable includes top Kentucky Derby contender Esken dereya, who won the $250,000 Fountain of Youth Stakes at Gulfstream Park on Saturday.
The bank, in a motion filed Tuesday, asked the court to block the use of the bank's cash collateral unless Zayat provides additional collateral or a capital infusion.
If Zayat can't or won't provide collateral or cash, then he should be required to tap a proposed $2.45 million loan from his brother, Sherif El Zayat, the bank argued.
Fifth Third said it is preparing a motion that would allow it to sell Zayat's horses to pay off the loans if that occurs.
Ahmed Zayat said Wednesday he will fight the motion. "They are talking liquidation; I'm talking reorganization," Zayat said. He said he plans to file a reorganization plan to bring the stable out of bankruptcy in coming weeks.
Zayat filed for bankruptcy Feb. 3 to block the bank's attempt to take over his stable in U.S. District Court in Lexington.