Zayat Legal Woes Continue As Creditors Force Involuntary Bankruptcy

2015 Triple Crown-winning owner Ahmed Zayat was hit with yet another legal proceeding this week, as the Thoroughbred Daily News reports a small number of Zayat creditors have initiated involuntary bankruptcy proceedings against him.

Involuntary bankruptcy actions are relatively uncommon, according to the TDN’s T.D. Thornton, and are primarily designed to protect creditors who fear a debtor’s assets will dwindle before they can be repaid. Thornton explains the gamble with involuntary bankruptcy filings is the filers can be required to pay the defendant’s legal fees if a judge dismisses the petition.

Zayat filed for Chapter 7 bankruptcy last week, listing tens of millions of dollars in debts. A judge awarded MGG Investments a $24.5 million in summary judgment against his Zayat Stables earlier this year as part of a civil suit over a loan that went partially unpaid. Zayat has countersued and the case is ongong.

The petitioners in the involuntary bankruptcy petition include former Zayat financial advisor Steven Keefer (who Chapter 7 documents say is owed $275,000), U.S. Elite, where Keefer is CEO ($188,500), and and Joseph Bodner ($150,000).