Ahmed Zayat, who filed for Chapter 7 bankruptcy last year after being sued by MGG Investment Group for allegedly defaulting on a $24 million loan, has stopped paying his attorneys, according to a court filing.
Jay L. Lubetkin, a partner in the Rabinowitz, Lubetkin & Tully law firm that has been representing Zayat in both the bankruptcy and MGG adversary proceedings, filed a notice with U.S. Bankruptcy Court in New Jersey on Monday seeking to withdraw from the case.
Lubetkin said Zayat has failed to fulfill his promise to keep outstanding invoices within 60-day terms and a subsequent promise to make minimum monthly payments of $50,000. Lubetkin said he tried communicating with Zayat “at least nine times” in July to discuss the status of payments but has not received a “substantive or satisfactory response” from the Eclipse Award-winning owner and breeder who campaigned 2015 Triple Crown winner and Horse of the Year American Pharoah.
Lubetkin said Zayat currently owes $368,273.33, not including billings incurred since June 29, 2021. Lubetkin said the last payment received was May 5, with outstanding bills now dating back to February of this year.
“If (Zayat) were to satisfy his previously expressed commitment to keep our receivables within 60-day terms,” Lubetkin wrote, “it would require an immediate payment of $232,899, and a further payment of $76,717 when the billing governing July’s efforts is tendered.”
Lubetkin commented that the MGG Investment Group lawsuit is “in its earliest stages” and likely would not go to trial until the second quarter of 2022, at the soonest.
Zayat’s “payment failures constitute a failure to substantially fulfill obligations to our firm,” Lubetkin wrote, “and the debtor (Zayat) has been given reasonable warning that we will have no choice but to withdraw unless those obligations were fulfilled. … Additionally, continuing representation of the debtor will result in an unreasonable financial burden on our firm.”
Zayat, Lubetkin added, is “an extremely intelligent individual who fully understands the Chapter 7 bankruptcy process, the nature of the claims being made against him by MGG Investment Group in its adversary proceeding seeking the non-dischargeability of the alleged debt due MGG Investment Group, the role of his individual Chapter 7 trustee, the role of the Chatper 7 trustee for Zayat Stables LLC, the prospect of an objection to discharge complaint being filed against the debtor by his individual Chapter 7 trustee and the prospect of a Section 523 complaint being filed against the debtor by the Stables’ trustee. The debtor also understands the exemption available to his interest in residential real property, the exemption available to his ownership interest in home furnishings, and the impact of the real property and personalty appraisals obtained by his Chapter 7 trustee.
“Based on the debtor’s intelligence and the detailed statutory and caselaw information which has been shared with the debtor,” Lubetkin concluded, “the debtor is fully capable of representing himself in his main bankruptcy case and in the adversary proceeding.”
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