Top Thoroughbred owner Ahmed Zayat announced Wednesday that he and Fifth Third Bank have reached a preliminary agreement to allow Zayat Stables to spend its cash on hand for daily operations.
The bankruptcy court in New Jersey has allowed Zayat on a preliminary basis to spend up to $1.04 million; Fifth Third had filed a motion to oppose that.
According to a release, the bank no long er opposes the use of the cash, which is partial collateral for loans made to Zayat. A hearing March 8 on that matter will be canceled.
"I am pleased to have reached this interim agreement with Fifth Third as it is important to both of us that Zayat Stables LLC focus on the business at hand, such as the exciting and remarkable achievements of Eskendereya, the likely favorite in the Kentucky Derby," Zayat said in the statement. "It is my hope and desire that this temporary respite will allow us to resolve our differences to our mutual satisfaction."
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Fifth Third Bank had no comment on the agreement, which was reached Tuesday.
Zayat said the bank also has agreed to allow him to tap into a loan from his brother to conduct normal business. The bank had threatened to try to liquidate Zayat's 200-plus horse stable if he used that money.
Zayat is required to provide the bank with his proposed terms for repaying $34 million in loans. The bank will respond with its own proposal, and then they will negotiate for a global settlement.
The bank has sued Zayat in U.S. District Court in Lexington, alleging his loans are in default; Zayat has filed a counterclaim alleging the bank reneged on plans to refinance and extend the loans.
"It's a very good development. It's a very realistic and logical conclusion to commercial disputes," Zayat said Wednesday.