The holder of a note and mortgage on the Teaneck, New Jersey residence of Ahmed and Joanne Zayat filed for bankruptcy court leave to seek foreclosure of their 7,714-foot mansion squares. The deposit was made by Fay Servicing on behalf of the Wilmington Savings Fund Society in its capacity as investment trustee.
Ahmed Zayat is the head of Zayat Stables, which owned the Triple Crown winner in 2015 american pharaoh during his racing career, among other successful horses.
The Zayat bankruptcy case is an involuntary Chapter 7 case brought by creditors in September 2020, essentially seeking to liquidate Zayat’s estate. When the case was filed, an automatic stay went into effect, prohibiting creditors from taking certain steps to protect their rights. Wilmington hopes to end the stay so that he can seek a judicial sale of the residence for the settlement of the mortgage debt.
The motion for cessation alleges:
- Wilmington, in his capacity as trustee of a commercial enterprise – not to be confused with the role of trustee in the Zayat bankruptcy case – owns a note with an initial principal amount of $ 1,861,371 and that the debt is secured by a mortgage on the property. domain.
- The current debt balance is $ 1,867,109.54.
- The lifting of the automatic stay is allowed when the debtor has no equity in the asset in question and the asset is not necessary for an effective reorganization.
- There are other liens on the property totaling approximately $ 2,915,000.
- The residence was valued at $ 3,550,000 at the start of the bankruptcy case and therefore has no equity as it is worth less than mortgage debt and other liens on the property.
- The Zayats have provided no evidence that a reorganization plan is being considered or that ownership would be required to make one.
The case is scheduled for a hearing Feb. 1 at 10:00 a.m.ET in the United States Bankruptcy Court for the District of New Jersey before Judge Vincent F. Papalia.
According to Realtor.com, the two-story residence built in 2001 sits on approximately half an acre. Zillow.com says the 2020 tax assessment on the home was $ 2,667,100 and annual property taxes are $ 85,267.
The Zayat bankruptcy case is a long-standing and controversial one with seemingly endless problems. The outcome of the petition is clearly in the hands of the bankruptcy court. If the petition is granted, the next step would be to file a foreclosure case, presumably in a state court of competent jurisdiction in the county where the property is located.
The motion does not specify whether the Zayat made scheduled payments on mortgage debt or paid property taxes. However, the way the motion is worded suggests that such payments would not be relevant to the outcome of the motion.
Documents filed in a court case usually indicate only one side of the question.