Federal bankruptcy court in New Jersey on Wednesday approved a global settlement of the legal disputes between top Thoroughbred owner Ahmed Zayat and Fifth Third Bank.
The settlement, which will entail payments of more than $34 million to the bank by 2015, came after Fifth Third committed to vote for Zayat Stables' proposed reorganization plan at the confirmation hearing scheduled July 15 in U.S. Bankruptcy Court in New Jersey.
Zayat said in a statement that he was "thrilled" by the approval, which wraps up more than six months of financial drama in the horse industry.
"This is a huge step forward, not only for Zayat Stables but for the entire industry," Zayat said. "With all outstanding matters finally resolved, we can keep our focus where it needs to be — on breeding and racing some of the top horses in America."
Never miss a local story.
Fifth Third attorney Craig Robertson said the bank would have no comment.
The deal approved Wednesday required Zayat Stables to pay about $6.1 million in principal and interest immediately. Zayat will make additional payments each year based on the sales of his horses, with a balloon payment of the remainder due in 2014.
In his order, Judge Donald H. Steckroth said the settlement was in the best interests of the debtor, its estate and its creditors.
As part of the settlement, Zayat and Fifth Third also agreed to drop their ongoing legal dispute in U.S. District Court in Lexington.
Fifth Third sued Zayat in December, alleging he had defaulted on more than $34 million in loans. Zayat entered bankruptcy to keep the bank from seizing his 200-plus racehorse stable, one of the top money-earning stables in the country.
Zayat also countersued Fifth Third, alleging fraudulent and misleading banking practices. Zayat claimed the bank had agreed to restructure and extend his loans.
As of June 30, according to Equibase, Zayat Stables is the third-leading Thoroughbred owner, with almost $2.1 million in earnings this year.