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To pay Zayat's debt, Derby favorite may be sold

Likely Kentucky Derby favorite Eskendereya may be sold this year to pay off owner Ahmed Zayat's bank debt, according to a bankruptcy reorganization plan Zayat filed Friday in New Jersey.

Zayat included the information in projections for resolving debts that include more than $34 million in claims by Fifth Third Bank.

"The Projections assume that the Debtor will sell a sufficient number of horses, including 100% of Eskendereya in 2010, to achieve sales proceeds of $16.8 (million), $15.2 (million), $10 (million), $11 (million) and $11 million in 2010, 2011, 2012, 2013 and 2014, respectively," according to the court documents. "A non-refundable deposit of $2 (million) is assumed to be received in September 2010 from the sale of Eskendereya, with the remaining Eskendereya proceeds assumed to be received in December 2010."

The documents do not put a dollar figure on Eskendereya, whose value has soared since Zayat bought the Giant's Causeway colt for $250,000 as a yearling at the Keeneland September sales. A win in the Kentucky Derby in two weeks could go far to put a dent in Zayat's debts.

However, the amount the bank will get could be impacted by litigation that Zayat has filed against the bank, including multimillion-dollar lender liability claims. Under the proposed reorganization plan, Zayat would put any payments to Fifth Third in escrow until his claim against the bank is resolved.

Zayat claims the bank reneged on agreements to restructure and extend the loans. The bank has not responded yet to his adversarial motion in bankruptcy court but has been working in Lexington to lift the stay against liquidating his stable.

The financial drama has been playing out for months. In December, Fifth Third sued Zayat, one of the top Thoroughbred owners in the last few years, alleging he defaulted on loans, and moved against him in federal court in Lexington to seize his stable of 200-plus racehorses.

Zayat entered bankruptcy in February to block that takeover.

Then Eskendereya, trained by Todd Pletcher, took off, winning the Fountain of Youth Stakes, an early Derby prep race in Florida, by 81/2 lengths. Since then, the horse has won the Wood Memorial at Aqueduct, stamping him as the one to beat at Churchill Downs on the first Saturday in May.

The plan to pay off the debts also would repay in full almost $2.4 million owed to Keeneland.

The plan must be approved by a committee of creditors and the court before it can go into effect. No date has been set for a vote.

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