Fifth Third Bank plans to continue its push to take over the stable of top horse owner Ahmed Zayat. The bank said in a filing in Zayat's bankruptcy that it plans this week to request a trustee in the U.S. Bankruptcy Court in New Jersey.
A hearing is scheduled March 8.
According to the bank, the move is necessary because Zayat's 200-plus stable of racehorses, which are collateral for the $34 million he owes the bank, is at risk.
As evidence, the bank said that Zayat diverted $2.75 million in insurance paid on the death of miler Thorn Song.
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Zayat has not publicly said that the horse is dead. Jockey Club registrar Rick Bailey said no death report has been filed.
In his last appearance, Thorn Song bolted in a race at Del Mar in California on July 25. The Daily Racing Form reported Aug. 13 that Thorn Song had been sent to a veterinary clinic with severe abscesses in both front feet.
Trainer Mike Mitchell said at the time that Thorn Song, the son of Unbridled's Song, was unlikely to make the Breeders' Cup, where he had been a leading contender for the Mile. "It's a small chance," Mitchell told the Form.
It appears that the horse might have already been dead.
The check from North American Specialty Insurance to Zayat Stables puts the loss date for "horse mortality" at Aug. 2. The check was dated Oct. 19, 2009.
The bank said that Zayat hid this payment "despite repeated inquiries" into the horse's whereabouts and well-being.
Mitchell could not be reached for comment. Zayat's New Jersey attorney, Michael Sirota, did not return a call for comment.
Multiple Grade 1 winner Thorn Song won $1,132,300 in eight races out of 29 starts, including the Shadwell Turf Mile and the Maker's Mark Mile, both at Keeneland, as well as the Shoemaker Mile at Hollywood Park in California.
Fifth Third also said that Zayat has dropped almost all of the insurance on the rest of his stable. According to the bank's filings, Zayat told them in June 2009 that he had $25 million in insurance in place.
"Either that statement was untrue when made or (Zayat) subsequently let virtually all of its insurance lapse without advising Fifth Third," the bank said. Zayat now has only $7.75 million in mortality insurance, less than 8 percent of that required to adequately protect its investment, the bank said.
The bankruptcy court on Friday approved on an interim basis Zayat's motion to use cash collateral from Keeneland and from Fifth Third Bank, over Fifth Third's opposition.
Zayat can use up to $1,040,892 through March 8 for the continued operation of the stable, including payments to trainers, and insurance expenses.
Zayat declared bankruptcy last week to block Fifth Third's move in U.S. District Court in Lexington to appoint a receiver to take over the stable because Zayat is out of money.