Although Keeneland has announced it has been retained to market the 20% minority interest in reigning Horse of the Year Curlin, a pending motion in a Kentucky court is asking for the current sale process to be halted.
Keeneland announced Oct. 15 it had been retained by a court-appointed receiver to market the minority interest. On Sept. 25, Franklin County Circuit Court Judge Roger Crittenden signed an order allowing Matthew L. Garretson, the court-appointed receiver for Midnight Cry Stable (owned by Shirley Cunningham Jr. and William Gallion), to offer its 20% minority interest in Curlin for sale through a sealed-bid process.
Ownership of the interest is held in the name of Midnight Cry’s parent company, Tandy LLC. Jess Jackson’s Stonestreet Stables owns an 80% majority interest in the colt.
But the minority owners of Curlin recently asked the court to halt the process set to liquidate their 20% interest, a legal development criticized by Stonestreet Stables as harmful to any potential stud plans being immediately considered for the 4-year-old champion son of Smart Strike .
Andre Regard, an attorney representing the operating entity of Midnight Cry Stable, recently filed a motion to vacate the order signed by Crittenden, saying, in part, that the sealed-bid process will not attain the highest market value for the 20% interest.
“I think it’s premature for Keeneland to market the interest when there are motions pending to vacate the order of the receiver,” Regard told The Blood-Horse. Regard added that the motion would have to be argued at a future hearing, an event which Crittenden has not set.
Geoffrey Russell, Keeneland’s director of sales, in a telephone interview said the auction house had simply been retained by the receiver, and was not going to make judgments one way or another regarding the legal wranglings of the warring parties.
“Our side of the deal is marketing the horse,” Russell said. “The legal stuff will be handled by the Garretson group. We are not involved in the legal aspects; we are hired for our marketing expertise.”
The receiver was previously named by the court to manage Curlin and other assets of Tandy, which has been accused of trying to circumvent compliance with a $42-million judgment awarded former clients of Cunningham and Gallion. The two attorneys are embroiled in criminal and civil actions stemming from their handling of settlement funds in the class-action lawsuit involving the fen-phen diet drug.
Stonestreet Stables in a reply brief claimed the Tandy motion was filed in “bad faith” by the minority ownership.
“Although Stonestreet had done its best to maximize the horse's value through excellent management of his racing career, the fact remains that decisions as to his future cannot be reasonably be made until the 20% interest owned by Tandy is free and clear of the cloud created by this action and the plaintiffs claim to ownership of the 20%,” the brief said.
The brief further alleged that Tandy’s request for a different kind of sale process “is nothing but a belated tactic designed to harass Stonestreet and delay the resolution of the cloud that has been hanging over Stonestreet’s 80% ownership interest in the horse since the inception of this action.”
Stonestreet Stables has asserted both in court and in filings that the sale of the minority interest needs to take place as soon as possible to clear the way for a possible retirement to stud of Curlin for the 2009 breeding season.
"The owners of high quality mares book their mares each year generally by the end of October, and if the sale of this 20% does not take place within the next couple of weeks, Curlin's breeding prospects will be damaged because it would force Curlin to make a late entry into a very competitive stallion market," the brief said.
An accompanying affidavit of support signed by John Moynihan, a bloodstock agent and advisor to Stonestreet, claimed that any decisions on Curlin’s future were being adversely affected by the lawsuit.
“It is ... extremely difficult for Stonestreet ... to make any decisions regarding whether the horse will continue to race into the next season as a 5-year-old or whether the horse will stand at stud, until the 20% interest of Tandy is divested,” he wrote.
If the current process is allowed to continue, sealed bids will be allowed until Nov. 5. Stonestreet Stables has a contractual first right of refusal on any offer to purchase the interest, and is also allowed to bid in the process.