The court-appointed receiver for Zayat Stables has “identified unorthodox, possibly fraudulent billing practices and billing errors in which trainers and other care providers effectively over-billed costs as a means of increasing the Receiver's statutory lien obligations,” according to a report filed in Fayette, Kentucky, Circuit Court May 5.
No trainers or other care providers were identified, and no further detail was provided, only that the identification of these practices is now “resulting in a significant savings to the Receivership.”
The report was the third such monthly report submitted by Elizabeth Woodward, the court-appointed receiver for Zayat Stables LLC, and summarizes her work from March 22, 2020 through April 24, 2020.
In January, the New York-based lending firm MGG Investment Group filed a $23 million lawsuit against Ahmed Zayat and his financially troubled Zayat Stables. Shortly thereafter, Woodward, the director of forensic accounting and litigation support for Dean Dorton, one of the largest certified public accounting firms in Kentucky, was named receiver. Woodward has 25 years of experience in public accounting, and specializes in bankruptcy accounting matters.
In addition to the revelation of possible fraud, the most newsworthy item in the report is that the Receiver “does intend to pursue racing as tracks open.” In the period covered by this report, only one Zayat Stables horse raced, when Zyramid (City Zip) finished ninth at Oaklawn on April 5.
Other items in the report summarize how Woodward and her consultant, Gatewood Bell, continue to “catalogue assets, liabilities, and receivables of the estate, maximize asset value, and execute on her decisions regarding the racing, training, and selling of certain assets.” The report says that she has taken steps to “stabilize the failing business operations of Zayat Stables and responded to legal claims asserted against Zayat Stables in jurisdictions around the country.”
The report says that Woodward has collected approximately $1,293,808 through purse proceeds and sales of horses. One horse was sold privately during this period for $100,000, Gidu (Ire) (Frankel {GB}). A 5-year-old, Gidu has earned just shy of $300,000 in 19 starts with four wins.
Expenses for the entire stable during the period were $442,665 on vet bills, board bills, administrative fees and commissions.
In other Zayat Receivership news, the hearing to be held on Zoom Wednesday regarding Hill 'n' Dale's motion to be dismissed from the lawsuit has been postponed by Judge Kimberly Bunnell and has not yet been rescheduled.
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