Insolvency court petition calls for Zayat house to be foreclosed


The owner of a note and mortgage on the residence of Ahmed and Joanne Zayat in Teaneck, NJ, has filed for bankruptcy clearance to seek foreclosure of their 7,714-square-foot mansion. The application was made by Fay Servicing on behalf of the Wilmington Savings Fund Society in their capacity as investment trustee.

Ahmed Zayat is the head of Zayat Stables, who owned the 2015 Triple Crown winner American pharaoh during his racing career alongside other successful horses.

The Zayat bankruptcy case is an involuntary Chapter 7 case filed by creditors in September 2020 and is essentially aimed at liquidating Zayat’s estate. When the case was brought, there was an automatic suspension prohibiting creditors from taking certain measures to protect their rights. Wilmington hopes to end the residency so it can seek a judicial sale of the residence to settle its mortgage debt.

The termination request claims:

  • Wilmington, in his capacity as trustee of a commercial enterprise – not to be confused with the role of trustee in the bankruptcy proceedings of Zayat – owns a debt instrument of the original face value of $ 1,861,371, and that the debt is secured by a mortgage on the property.
  • The current debt balance is $ 1,867,109.54.
  • The lifting of the automatic suspension is permissible if the debtor has no equity in the property in question and the property is not necessary for effective renovation.
  • There are additional liens on the property totaling approximately $ 2,915,000.
  • The residence was valued at $ 3,550,000 at the start of the bankruptcy and therefore has no equity as it is worth less than the mortgage debt and other liens on the property.
  • The Zayats have not shown that a reorganization plan is being considered or that the property would be required to implement one.

The matter is scheduled for February 1 at 10:00 am ET in the New Jersey District Bankruptcy Court before Judge Vincent F. Papalia.

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According to, the two-story house built in 2001 is located on about half a hectare. says the 2020 home tax assessment was $ 2,667,100 and the annual property tax is $ 85,267.

The Zayat bankruptcy case has been drawn out and controversial with seemingly endless problems. The outcome of the application is solely in the hands of the bankruptcy court. If the application is upheld, the next step would be to file foreclosure proceedings, presumably with a competent court in the state where the property is located.

The application does not state whether the zayats made scheduled payments on the mortgage debt or paid the property taxes. However, the way in which the application is worded suggests that such payments are not relevant to the outcome of the application.

Filings in a legal case usually only indicate one side of the problem.


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