Documents filed in connection with the Chapter 11 bankruptcy case of Zayat Stables say the money gleaned from the sale of grade I winner Eskendereya was placed in an escrow account, but do not say exactly how much Jess Jackson’s Stonestreet Stable paid for the son of Giant's Causeway . However, some financial data in the same documents shed light on about how much was received for the colt.
Zayat Stables’ sole shareholder Ahmed Zayat said in the court filing in federal bankruptcy court in New Jersey that he retained an unknown number of breeding rights in Eskendereya, the Wood Memorial Stakes (gr. I) winner who was the morning-line favorite for the Kentucky Derby Presented by Yum! Brands (gr. I) until he was scratched early Derby week due to an injury. Eskendereya, who also won the Fasig-Tipton Fountain of Youth Stakes (gr. II), was later retired with four wins and one second in six career starts and earnings of $725,700.
Noting that on or about May 10, Zayat sold an interest in Eskendereya to Jackson, the documents said "The debtor’s ability to disclose further details of the Eskendereya sale is limited by a confidentiality provision in the purchase agreement, which provides that the debtor and Stonestreet Thoroughbred Holdings shall maintain in confidence the terms and conditions of the Eskendereya sale."
Zayat provided the information as part of a "Proposed First Amended Disclosure Statement" for a reorganization plan under Chapter 11. Zayat Stables filed for bankruptcy protection after Fifth Third Bank filed suit, claiming the racing and breeding entity had defaulted on a loan totaling more than $34 million. Zayat alleged he could have met certain payment requirements by selling horses, but he was led to believe by Fifth Third loan officers that his loan would be extended.
A hearing on Zayat’s disclosure statement is scheduled to be heard in bankruptcy court June 8.
The projected income statements for May 2010 show $7.5 million from the sale of horses and the restricted cash from horse sales to be $8.3 million. In other filings previous to the sale of Eskendereya, Zayat projected the restricted cash from horse sales to be $1 million. All told, Zayat has projected $16.8 million in 2010 from horse sales, including Eskendereya, with sales figures of $15.2 million, $10 million, $11 million, and $11 million annually from 2011-2014.
"The proceeds from the Eskendereya sale were consistent with the projected sales of horses in 2010," the filing states.
Meanwhile, in advance of the June 8 hearing, attorneys for the official committee of unsecured creditors of Zayat Stables filed documents with the bankruptcy court, saying they "have concerns about certain provisions of the debtor’s first amended plan and the committee has raised those confirmation concerns with the debtor."
Noting that previous discussions between Zayat’s attorneys and attorneys for the committee of unsecured creditors had resulted in modifications to the plan that were consistent with the discussions, the committee "anticipates working cooperatively with the debtor to resolve its confirmation issues."
