The financial institution, which in 2006 issued a $7.5 million mortgage to ClassicStar, is asking the United States Bankruptcy Court division housed in Lexington to help it recover more than $1 million in personal and real property it claims is collateral for the loan. ClassicStar, along with other defendants, has been accused in separate civil actions of defrauding investors in its former broodmare lease programs out of upwards to $600 million.
Fifth Third Bank, which claims it is still owed $3 million on the mortgage, recently filed the relief motion after ClassicStar’s bankruptcy proceeding was converted from a Chap. 11 business reorganization to a Chap. 7 liquidation in April. The motion asks for the lifting of a statutory automatic stay typical to most bankruptcy cases.
“This is not an extraordinary request,” said attorney Robert J. Brown of the Wyatt, Tarrant & Combs law firm, who represents the bank. “This is typical action taken by a secured creditor to recover its collateral when it is clear the borrower is not going to be able to rehabilitate itself.”
Among the secured assets Fifth Third Bank seeks are (estimated values per court filings):
* Stallion shares in Speightstown , valued at $40,000; Silver Train, $25,000; and Whywhywhy, $1,000;
* Stallion income from Real Quiet, valued at $79,801; Silver Train, $4,549; Vindication, $2,553; and Our Emblem, $733;
* Keeneland lien proceeds totaling $135,010 from the sale of three unnamed horses;
* Maryland purse account winnings of Smart N Pretty, $46,050;
* Breeders' Incentive Awards held by Kentucky Horse Racing Authority, $160,328;
* Two pieces of Kentucky real estate valued at $580,000.
More than 200 unsecured creditors, some of which are litigants in the separate civil fraud case, originally filed claims of about $1.4 billion in the bankruptcy action. Filed court documents allege ClassicStar liquidated the bulk of assets prior to filing for bankruptcy protection in September 2007, including the partial sale of its Kentucky farm and various horses to Woodford Thoroughbreds.
Plaintiffs in the civil case, which is also being heard in Lexington, claim the alleged fraud was performed by overselling interests in mare-lease packages that also failed to produce promised significant tax breaks to clients. Some defendants are also accused of swapping out price-inflated Quarter Horse matings for Thoroughbred matings, and for exchanging mare programs for energy company stock investments that never came to fruition.
In addition to original ClassicStar principals Tony Ferguson and the father-and-son team of David and Spencer Plummer, a combined group of 30-plus defendants in the civil action include a finance company allegedly affiliated with the Plummers, as well as various individuals and entities involved in financial planning and accounting firms, among others, who allegedly advised various plaintiffs.
The Kentucky civil case, which is a consolidation of at least 18 lawsuits filed in various states, features as plaintiffs mostly former ClassicStar investors who were drawn to the Thoroughbred breeding and racing scene by the company’s broodmare lease program.
A separate criminal investigation has been ongoing since the former ClassicStar Farm in Versailles was raided by federal officials in February 2006. The U.S. Attorney’s Office has never updated the status of that investigation, but mention of its ongoing nature shows up often in documents filed in the civil case.
Other selected articles on ClassicStar:
ClassicStar Lawsuits Moved to Kentucky (October 2007)
ClassicStar Bankruptcy Filing Presents New Issues (September 2007)
One-Time ClassicStar Associates Blame Each Other for Woes (June 2007)
Former NBA Player Files Lawsuit Against ClassicStar (June 2007)
Woodford Thoroughbreds Takes Over ClassicStar Property (June 2007)
ClassicStar Dispersal Set (November 2006)
ClassicStar Operating a Day After IRS Visit (February 2006)