Photo Reuters
Donald Trump is making a splash in politics this year. The loud-mouthed reality TV star and casino mogul has rocketed to frontrunner status in the Republican primary race. Touting his business experience, Trump believes he can “make America great again”.
A cursory examination of his record proves somewhat troublesome, however. Particularly interesting is Trump’s propensity to file his businesses for bankruptcy. How can Trump call himself a successful businessman with so many bankruptcies under his belt? The answer, as you might expect, lies with “The Donald” himself. As it turns out, Donald Trump has a very different perception of bankruptcy than the general public does.
“I have used the laws of this country,” Trump told the audience at a debate, “the [bankruptcy] chapter laws, to do a great job for my company, for myself, for my employees, for my family.”
In short, Trump has used bankruptcy laws strictly to restructure his businesses, many of which he was keeping afloat with his own personal stash of cash. When you’re a business mogul like Trump, the people working under you are bound to make some poor decisions, but if anything—Trump’s dedication to doing whatever it takes to keep his projects above the water is actually somewhat admirable. Still, you can’t help but feel Mr. Trump’s success might have more to do with having a good bankruptcy attorney than business sense.
Let’s take a look at Trump’s four biggest bankruptcy blunders, and how he handled those situations.
The Trump Taj Mahal is a sprawling casino and resort located in Atlantic City. When it hit hard times financially, Trump invested a lot of his own money to save it. To come up with the needed funds, he sold off his 282-foot party yacht. He also ditched his private jet, the so-called “Trump Shuttle”, which carried him between Washington D.C., New York, and Boston.
In the end, Trump gave up half of his ownership stake in the Casino. His efforts paid off, however, as the Trump Taj Mahal still stands. Funnily enough, Trump’s largest creditor at the time of the bankruptcy was Carl Icahn, who Trump says he’ll pick for secretary of Treasury if he wins the presidency.
Unfortunately, about a year after winning the fight for the Trump Taj Mahal, his other Atlantic City properties experienced some severe financial difficulties. The Trump Plaza Hotel in New York city was also struggling. In all, the Trump Castle Casino Resort, the Trump Plaza Hotel and Casino, and the Trump Plaza Hotel in New York (Trump sure likes to put his name on things) filed for bankruptcy.
The restructuring meant Trump had to give up half his interest in the New York Plaza Hotel to his debtor, Citibank. He was able to retain majority ownership of the casinos, however.
Trump managed to stay out of bankruptcy court for over ten years, but decided it was time to shed some debit in 2004. Over the course of the proceedings, Trump’s enterprises threw off some $500 million in debt. Trump once again gave up majority ownership of some of his properties but remained in control of his casinos.
Now here’s something “The Donald” may not have been completely straightforward about during the Republican debate. He claimed he left Atlantic City due to foreseeing a future financial crisis, but he may have been forced out after his businesses again suffered financial hardship and had to file Chapter 11.
“I had the good sense, and I’ve gotten a lot of credit in the financial pages, seven years ago I left Atlantic City before it totally cratered,” he told the debate audience.
In 2009, however, Trump simply resigned from the board of his Atlantic City casino properties. Though many of them still bear his name, he gave up his remaining stake in the companies.
Now it seems Trump doesn’t want to be involved with Atlantic City at all. When two of the casinos that still bore his name again filed for bankruptcy in 2014, Trump sued them to have his name removed.
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