A recent Law 360 story by Nick Muscavage, “Zayat’s Bankruptcy Attys Want Out Over Unpaid Fees,” reports that the law firm representing thoroughbred race horse owner Ahmed Zayat in his bankruptcy proceeding has asked a judge to be removed from the case, claiming that the businessman owes the firm hundreds of thousands of dollars in legal fees. Jay L. Lubetkin, a partner at Livingston, New Jersey-based firm Rabinowitz Lubetkin & Tully LLC, told a New Jersey bankruptcy judge that Zayat owed his firm $368,273 as of June 29.
The attorney said he tried to communicate with Zayat — who bred and owns the 2015 Triple Crown winner American Pharoah — at least nine times in July, but the businessman never responded. "The debtor has been consistently advised that absent satisfactory arrangements for the payment of the outstanding fees and expenses due to our firm and newly incurred billings, the firm would have no alternative but to seek to withdraw from the representation of the debtor," Lubetkin wrote in a motion his firm filed.
The fee dispute arises from Zayat's $18.8-million bankruptcy case in the U.S. Bankruptcy Court of the District of New Jersey. In an adversary case related to Zayat's bankruptcy, MGG Investment Group LP filed claims against Zayat and his company, Zayat Stables LLC, alleging that Zayat engaged in a "fraudulent scheme" by selling off assets he had secured as collateral to loans from the investment firm.
Zayat lied to MGG about his assets and submitted false financial statements that concealed or distorted Zayat Stables' sales revenue and other financial information to deceive MGG, the investment firm claimed in court documents. According to MGG, Zayat owes more than $24 million in unpaid loans, plus accrued interest.