NEWS
Fifth Third claims Zayat hid loss of Thorn Song
Posted: Tuesday, February 09, 2010 11:02 AM
THORN SONG
Churchill Downs/Reed Palmer Photography
by Jeff Lowe
Fifth Third Bancorp claims Ahmed Zayat concealed a mortality insurance claim for multiple Grade 1 winner Thorn Song last summer in order to hide $2,750,000 in proceeds that he should have paid to the bank.
Zayat Stables owned Thorn Song, who was pulled up in the Eddie Read Handicap (G1) on July 25 at Del Mar after bolting to the outside rail in the first turn. Trainer Mike Mitchell told Daily Racing Form the morning after the race that the horse was fine. A few weeks later, Mitchell said he sent Thorn Song to Alamo Pintado Equine Medical Center in Los Olivos, California, to be treated for severe abscesses.
Fifth Third found documentation that Zayat made a claim with North American Specialty Insurance Co. and received a $2,750,000 payment for a mortality insurance policy on August 2, eight days after the Eddie Read. The check is dated October 19.
Mitchell told the Lexington Herald-Leader on Tuesday that the horse is alive and may be saved as a stallion. Fifth Third said it made multiple inquiries into the whereabouts and well-being of the Unbridled’s Song horse and Zayat never responded.
Zayat and Mitchell were unavailable for comment on Tuesday afternoon. Ron Kirk, whose company manages the horse program for North American Specialty Insurance Co., said Thorn Song is alive but declined to comment further.
Bloodstock agent Rollin Baugh said he was aware of Thorn Song being alive as of a few weeks ago, but he did not know where the horse is stabled. Alamo Pintado founder Doug Herthel, D.V.M., was not available for comment.
Baugh said under terms of a mortality policy an insurance company will sometimes pay for a qualifying claim and take possession of the horse.
“It’s a horse mortality policy, and settlement can take place without the animal being humanely destroyed,” Baugh said. “That’s a very standard type of definition. They pay the policy and hopefully can turn the situation around to where you have a horse that’s healthy and able to get on with its life. That happens particularly in a lot of fertility cases. A lot of horses recover.”
Fifth Third said the concealed insurance payment is evidence that a receiver should be appointed to oversee Zayat Stables' 203 horses, which are collateral for $34,265,970 in loans that he owes the bank.
Zayat filed for bankruptcy protection in New Jersey on February 2 to avoid the appointment of a receiver to manage the stable. The bankruptcy court is allowing Zayat to spend up to $1,040,892 through March 8 from cash collateral from Keeneland Association and from Fifth Third.
Fifth Third opposed that motion. The bank also said Zayat now has only $7,750,000 in mortality insurance for his horses, and that the amount is less than 8% of the required insurance under the loan agreements.
“Fifth Third’s interest in its cash collateral is not adequately protected if the collateral that produces the cash—the equine collateral—is not adequately protected,” Fifth Third said in a filing to the court. “The debtor must provide for the equine collateral to be insured at the full value of each horse, with Fifth Third named as a loss payee, before this court can determine that Fifth Third is adequately protected.”
The bank will request a trustee in the bankruptcy case. A hearing is scheduled for March 8.
Thorn Song won four graded stakes races, including the 2008 Shadwell Turf Mile Stakes (G1) at Keeneland Race Course, Firecracker Handicap (G2) at Churchill Downs, and ’09 Shoemaker Mile Stakes (G1) at Hollywood Park. Dale Romans trained him until the Eddie Read, in which he made his first start for Mitchell.
Purchased for $200,000 at the 2005 Fasig-Tipton Midlantic two-year-olds in training sale, the gray or roan horse out of Festal, by Storm Bird, earned $1,132,700.
Jeff Lowe is a Thoroughbred Times staff writer
