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How Does Trump repeatedly file for Bankruptcy and still stay on top?
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Oct 2005
Donald Trump has become infamous for telling business mogul wannabes "You're fired!" every week on primetime television. Yet, after Trump's casino operations filed bankruptcy for the second time this past November, many have wondered if it isn't time for board members to give Trump a pink slip. Despite the company failings, Trump will remain as chairman and CEO and continue to collect a $2 million dollar paycheck. So...how does a CEO decide to file for bankruptcy twice and still come out at the top of the heap?
No Personal Involvement
First, Trump doesn't get personally involved. He knows how to protect his personal finances. In both instances, Trump's corporations have filed for bankruptcy; Trump personally has not. Hence, when his casino fell into about a billion dollars in debt, the corporation filed for Chapter 11. Trump only made the decision to do so once he had spoken to his banks and bondholders. But, by filing, he gave his business the opportunity to regroup and reduce his business debt. It didn't hurt however that it would also reduce his personal debt, as Trump is likely the one every creditor would look to if the Taj Mahal couldn't pay up. So, in fact, Trump avoided potential lawsuits from credits and he may have also avoided personal bankruptcy by keeping his own bank account insulated.
Trump, it appeared, had triumphed. His company had dire financial problems but seemed to rise just as quickly from those bankruptcy ashes. Just three years later, he combined the hotels into the publicly held Trump Hotels and Casino Resorts.
For several years, the new company enjoyed double digit stock prices. His personal fortune in turn also skyrocketed. And the man who came close to losing it all leapt onto Forbes' most wealthy list.
Yet, Trump's public company would eventually fall...again. Within a few years of soaring high prices, the company stock had fallen into single digits. The one-time powerhouse company remained profitless and struggled just to pay the interest on the $2 billion debt. Trump claimed that the properties were unable to make the improvements necessary for keeping up with its flashier competitors. These financial troubles led to Trump's second trip into bankruptcy.
Win-Win Business Deals
It's in this second bankruptcy that Trump demonstrated the other quality that helps him stay on top. He knows how to create a win-win situation. This past November, Donald Trump filed for Chapter 11 a second time. Again, Trump asked to be able to restructure his company's debt and overhaul its aging casinos. Under the voluntary bankruptcy filing, Trump Atlantic City Associates, which is 99 percent owned by Trump Hotels & Casino Resorts Inc., listed $1.3 billion in debt and $1.5 million in assets.
But this time around the Donald proposed that reorganizing the company would provide him the cash to upgrade his properties. By making these changes, he could help keep the casinos competitive. The second benefit: bondholders would receive stock in exchange for forgiving the debt owed. In other words, it would increase their ownership of the company by roughly two-thirds.
The chances of making the money back and even a bit of profit will dramatically increase when the casino emerges from the reorganization. Why? Well, vendors will be paid.
But best of all, Trump got to keep his job (and his rather hefty salary). If all goes as planned, Trump's Atlantic City properties will be able to actually turn a profit and even potentially expand into new markets like Las Vegas.
At the end of the day, Donald Trump will not only come out on top, he may well come out in the green.
More info:
Most Viewed in Celebrity Lawsuits
Comments
Submitted by on Feb 28, 2010 - 8:53PM
If the assets are only 1.5 million, what do they comprise? Surely 1.3 billion of debt must have included borrowings for property; so where is the asset value of the properties in the balance sheet summary?
Submitted by on Jun 4, 2010 - 10:41PM
The society is facing problems with such laws. This has to go legal and it’s needed to be sorted at the earlier. The initiative taken for the concern is very serious and need an
attention of every one. This is the concern which exists in the society and needs to be eliminated from the society as soon as possible.
Submitted by on Apr 22, 2011 - 5:30AM
wow!!if this man runs for president we are all in trouble,,,hold on to you hats!
Submitted by on Apr 27, 2011 - 11:15AM
I remember reading many years ago that Trump made a habit of filing bankruptcy. This man scares me. I can't even see why they keep him on TV. Surely he is a bigot, a racist and doesn't care who he hurts as long as he can keep his money.
Submitted by on Apr 28, 2011 - 11:33AM
At this very moment he's negotiating and increase of his pay per show, now at 3M. He's looking at 10M. Because of his racist’s rants against the president, the ratings of his fake show are stunningly high. Do you get the wind? He fools the media for attention, so his show ratings keep shooting up. Once he closes a "deal" with NBC he'll say he decided NOT to run for president.
Yes, I agree. He should be placed right next to Bernard Madoff, only that he should be held "incommunicado" to avoid any attempt to make a "deal" for his cell key.
Submitted by on Apr 29, 2011 - 6:31PM
Oh yeah, he's a racist because he said the president should stay off the basketball court and do some work. Hm. The president does get plenty of shots of him playing basketball, not to mention his annual ESPN special of picking his March Madness brackets. But, the leftist-propagandists say, "African Americans play basketball" so its racist to say the president should get off the basketball court and get to work. Maybe Trump should have told him to take fewer vacations and get to work - but wait, African Americans take vacations - guess that would be racist to. Maybe Trump just should have said the president needs to work harder - no, that wouldn't work either. Come to think of it, ANY CRITICISM of this president will be called racism by the leftist-propagandists.
Submitted by on Jun 2, 2010 - 8:17AM
When people do things just because they can such as the casino industry, it is up to each individual to make the choice that money doesn't grow on trees as my father always taught me.
I have never stepped foot in a casino or bingo establishment ever in my short life time.
And still most who know me will say I have taken risks in my lifetime as well because I love the art of skydiving.
The thing is gambling hurts our community and donations to the community simply represent a smoke screen.
Regardless of what Trump decides to do with the gambling industry, it only hurts a wider range of people to foster irresponsible spending.
Submitted by on Sep 24, 2010 - 7:18AM
Here's the problem. In the public eye, Trump appears to be an exalted superstar of means depite the bankruptcies. There's a segment of the Amerivan population that are learning from this that the way to go when you have financial problems is to walk away or file for bankruptcy instead of maintaining any responsibility or ownership of your problem.
At the very least Trump should be off TV instead of held up as some kind of hero.
Submitted by on Oct 16, 2010 - 11:52AM
From reading these comments the probelm in America is education. A person filing reorganization bankruptcy isnt walking away from their debt. Chapter 7 is walking away from your debt. Someone with Trumps debt more than likely has 99% of it tied in secured debt...Would you rather him allow the banks to foreclose on the property? Knowledge is power.
Submitted by on Apr 12, 2011 - 1:12PM
Secured by what? His valued assets of 1.5 million? This is a shell game that continues to be perpetrated thanks to corporate interests and their congressional lackeys who have created the legal vehicle.
Submitted by on Nov 18, 2010 - 7:34AM
And this guy is going to run for president! Good luck to the republican party.
Submitted by on Mar 15, 2011 - 6:00PM
Well, he is conserving his personal cash. Isn't that what conservative is all about?
Submitted by on Apr 23, 2011 - 4:24PM
No! "Conservative" is about falling for the idea that by being conservative you are more patriotic, trustworthy, moral, christian, and if you really work hard, you'll some day be one of the wealthy few who get all the tax breaks, at the expense of the rest of the people in this country. It also includes being heartless, and considering yourself better than anyone else, and never having to apologize for anything.
Submitted by on Mar 20, 2011 - 8:50PM
If he could file some kind of "bankruptcy" and fix the national debt in 3 years, Id vote for him!
Submitted by on Apr 2, 2011 - 3:33PM
the guy is a scum. his lawyesr protect his personal money, he steals, and leaves town.
Submitted by on Apr 7, 2011 - 4:55AM
Glad to see another Republican who knows so much about debt.
Submitted by on Apr 7, 2011 - 7:34AM
I've always wondered how many contracters and suppliers this scum bag has bankrupted over the years.
Submitted by on Apr 10, 2011 - 7:49AM
Donald is a piece of trash and I never could understand how he became so rick so quickly and now I know!! They should limit the times on people filing for bankruptcy
Submitted by on Apr 12, 2011 - 1:02PM
And they want this fool for president. He can't manage his own money. And they think he could manage America. How foolish are American. I perfer Oprah myself. She worked her way to the top with many obsticles. And she is one of the richest woman in the world. And gives to Charities all the time. Larry the cable guy would at least look out for the interested of the people.
Submitted by on Apr 20, 2011 - 11:09AM
Anyone who votes for him as president is a fool. He will just add to the compounding problems in Washington right now. I think he is going into it trying to get the popular vote and I for one will not vote for him. The expression on his face looks like he smelled something horrible, like his own ideas spewing out of his mouth, full of crap.
Submitted by on Apr 21, 2011 - 2:31PM
Trump filed for corporate bankruptcy in 1991, 1992, 2004, and 2009.
And word is out that he again is not paying his bills and we may be looking at number 5.
I don't think Trump will want to disclose his assets. If he states too little to appease bankrupcty proceedings he won't look as rich to the public. If he states to high to make himself look good to the Birthers, bankruptcy court will have his public record of that. It's all in public court records, anyway, and wait for the press to start going thru that mess.
Submitted by on Apr 24, 2011 - 2:50PM
Please Americans, don't make such a mistake, There are so many desent one's amongest you all that are suffering needlesly right now, you don't need to compound your problems any more. However I can't see the Globalist power houses taking this guy serious, and that is where the control of American politic are. Read the book "POWER SHIFT" that was written by an insider during Reagan administration who was sent to prison.Find out who and how the voting is control at the Electorial college level and United Press International that does the tabulation of the votes. If what is in the book is correct, then you all are only made to go through an execise in futility.
Submitted by on Apr 26, 2011 - 6:22PM
Just sweep the debt under the rug, keep living the good life, and our short attention span society won't know the difference.
The Donald epitomizes the ALL FLASH NO CASH epidemic that is bringing this country down.
Submitted by on Apr 27, 2011 - 11:18AM
I've heard somewhere that Trump has made a practice of filing bankruptcy on more than one occasion. This man scarfes me. I can't see why they even keep him on TV.
Submitted by on Apr 27, 2011 - 8:05PM
Trump is good for the country.
Running a business is not like community organising.
They are many external factors that can damage one's business(es)e.g. Stupid Obamacare, delay in sales, union strike, Oil Price, taxation, wars etc.
Trump's experiences will be valuable for the country.
As Bill Gates said "failures are our best teachers".
Monica like Obama is just another "talker". Talk is cheap and destructive. Did she run a sucessful business?
If you love your country, vote for Trump or someone better.
If you hate your country - vote for Obama - and prepare to live in the US of Zimbabwe.
Submitted by on Apr 28, 2011 - 4:33AM
This bufoon is no more than the golden-plastico-haired combover poster boy for GOP hypocrisy. He has been bankrupt, I"ve heard, more times than many sad-storied former Hollywood child stars. Yet his image as one with business savy is sold to all by the americkan (mispelling intented) corporate media in the ongoing effort to sell the tired "success in amerika" BS line to the weary and hopefully foolish (no condescention intended). God help us all if this clwn is elected to high office in the US. We are now in dire need of a working class People's Party, and I suppose have been for most of my lifetime. We need that specific change, not just someone saying, "It's time for change!"
Submitted by on May 22, 2011 - 7:53AM
I think Trump would be perfect to finish the job that Wall Street has so carefully concocted and, with the help of at least 3 presidents, starting with Clinton, had almost succeeded in already, and are trying hard to do again. Although Obama is quite cooperative, they need someone like Trump to get it over and done with quickly, filing for bankruptcy to enable the introduction of the AMERO, the single currency of the US, Canada and Mexico!
Submitted by on Jul 6, 2011 - 2:43AM
Great article though I dont agree with the statement that Trump knows how to create WIN-WIN situation. I think Trump's fortune is based on his skills to create WIN-LOOSE situations. He WINS and the society LOOSES.
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