Fifth Third Ok'd to Proceed With Zayat Case

Kentucky litigation had been stayed, pending outcome of bankruptcy case.

A federal judge in Lexington has determined that Fifth Third Bank can go forward in attempting to recover debts from Zayat Stables and its Pioneer of the Nile subsidiary, although the case is pending in New Jersey bankruptcy court.

Fifth Third has sued Zayat Stables and sole shareholder Ahmed Zayat for more than $34 million claimed due on loans for the stable’s horses. Zayat countersued, contending that the bank’s equine loan officers assured him his loans would be renewed but that senior bank officials overruled them, leading to the lawsuit.

As a way of keeping his stable of more than 200 horses operational in light of Fifth Third’s efforts to have the horses dispersed, Zayat filed for Chapter 11 bankruptcy protection.

The Kentucky suit filed by Fifth Third has been stayed, or put on hold, as the bankruptcy case goes through its process.

However, U.S. District Judge Karen Caldwell ruled that part of the stay should be lifted and that Fifth Third can go forward with its claims against the solvent loan guarantors.

Last week, the New Jersey bankruptcy court ruled against Fifth Third’s objections and certified Zayat Stables' reorganization plan be put to a vote, which is scheduled for July 15.