Appeals court upholds dismissals in Zayat case

The Kentucky Court of Appeals unanimously agreed with the dismissal of MGG Investment Group’s complaint against a group of farms that had purchased various assets from Zayat Stables, including horses and breeding rights. The ruling was first reported on by BloodHorse.

The investment group claimed Zayat Stables, which took a loan of $30 million in 2016, using “equine collateral.” MGG said it should have been notified when, in 2017, Zayat Stable started to sell assets.

Zayat defaulted on the loans in 2019. MGG added the various buyers to its suit against Zayat in 2020, making the claim that they should have known MGG was entitled to proceeds from the sales.

The appeals court said in its opinion, written by judge Pamela Goodwine, that the company had the ability to check in with Zayat at any time.

“While Zayat Stables may have failed to comply with its obligation to notify MGG of the sale, MGG had other means of discovering it,” Thursday's opinion said.

Specifically, the opinion noted that MGG could “visit, inspect and conduct such examinations,” of Zayat Stables property, so long as the group provided Zayat with written notice. The company could also get equine appraisals at the expense of Zayat Stables.

According to court documents, Zayat sold El Kabeir to Yeomanstown Stud, American Cleopatra to Hill ‘n’ Dale Farm, American Pharoah’s breeding rights to LNJ Foxwoods and Orphendale and breeding rights to Flintshire Farm and Brad Sears. A 50 percent interest in Solomini was sold to McMahon of Saratoga Thoroughbreds.