American Pharoah owner Ahmed Zayat 'totally blindsided' by receiver appointment

Ahmed Zayat, breeder and owner of 2015 US Triple Crown hero American Pharoah, on Thursday said he was caught off-guard by an emergency hearing in which a judge ordered a receiver to oversee operations of Zayat Stables in connection with a civil suit filed by a New York investment firm.

Fayette County district judge Kim Bunnell on Wednesday ruled a receiver should be appointed in response to a motion filed by attorneys for MGG Investment Group, a New York-based firm that filed suit against Zayat Stables and Zayat. The suit is seeking damages of no less than $23 million.

"I was totally blindsided," Zayat said. "I have not even been served yet."

Zayat said there had been a hearing scheduled for Monday in the suit and that he was not informed of the emergency hearing at which the receiver was appointed.

He added: "I worked for 13 years to build this stable and have produced 26 stallions [Zayat-raced horses who were retired to stud]. I just don't understand. I put every single nickel I have into this."

On Thursday, Elizabeth Woodward, the director of forensic accounting and litigation support at the Lexington accounting firm Dean Dorton, was appointed as receiver in the case.

American Pharoah: landed the US Triple Crown in 2015Credit: Rob Carr (Getty Images)

MGG claims Zayat Stables defaulted on a loan and has sold assets, including breeding rights to 2015 Triple Crown winner American Pharoah that were being held as collateral against the loan, and that the receivership was necessary to protect its interests in the Zayat holdings.

Zayat Stables topped the owners' earning list with $10million in 2015, while American Pharoah, who stands at Ashford Stud, was the leading North American first-crop sire last year.

According to the suit, Zayat Stables sold 100 per cent of the stallion shares in American Pharoah on January 16, 2015 – well before the colt's Triple Crown run – to Orpendale, which is affiliated with Coolmore Stud and Ashford, for $23 million, with Zayat continuing to own the racing rights to American Pharoah.

The lawsuit stated that upon American Pharoah's retirement to stud, Zayat, his wife, and children were assigned a total of nine breeding rights entitling the holder the right to breed one mare in each breeding season over the course of the horse's life.

American Pharoah owner sued for $23m after alleged loan default

According to the MGG filing, those breeding rights were among the assets that were pledged as collateral for a term loan of $25 million made in July 2016. The suit alleges that over a seven-month period, the Zayats subsequently sold the nine breeding rights in American Pharoah in violation of the loan agreements.

The status of Zayat's operation has some trainers wondering what's next.

"My bookeeper was supposed to have a phone call with Justin Zayat this morning," said Robertino Diodoro, who trains four horses for the Zayats. "I think there are more than a few of us that are nervous now. I guess it could have been worse for us earlier last year when we had 12."

Diodoro indicated he felt there was some problem going on with Zayats, but added: "I didn't think it would be this big. It's not a good situation for everyone involved, especially the Zayats."

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