President Trump’s Bankruptcies; Just the Facts
My quick take: I do not want to make this post political, but I do want to address the connection between the President of the United States of America, and the Bankruptcy Code. We have all heard that “President Trump has filed bankruptcy numerous times.” In fact, President Trump has employed the Bankruptcy Code for his benefit 6 different times. As a bankruptcy attorney, I love that his use of the bankruptcy code has gotten so much attention. I like this because it shows us civilians that we can file bankruptcy and still accomplish everything we want in life. In fact, I would posit that it’s because of filing bankruptcy that we are able to accomplish great things! First, the effect of a bankruptcy gives us a fresh start with zero debt. Second, the mere presence of the Bankruptcy Code allows us to take exciting, innovative chances with our lives without the oppressive fear that we could forever have to live under suffocating debt. There is a way out, and it’s bankruptcy!
There are many rumors, both accurate and inaccurate, about President Donald J. Trump’s involvement with the United States Bankruptcy Code. Has he ever filed for bankruptcy? If so, how many times? Were any or all of his bankruptcies personal? Only business bankruptcies? We are here to finally put all those rumors to bed, and answer these interesting questions!
The quick-hit facts:
1) Trump has never filed personal bankruptcy. However, 6 times he has been the owner of a business that has filed for bankruptcy under Chapter 11 reorganization.
2) 6 times Trump has been an owner of a business that filed bankruptcy under Chapter 11 of the United States Bankruptcy Code.
3) According to the United States Courts, a Chapter 11 bankruptcy is as follows: “This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.”
All 6 of Trump's bankruptcies were for businesses he had an ownership interest in, and filed under Chapter 11 bankruptcy law between 1991-2009. According to the United States Courts, a Chapter 11 bankruptcy is as follows: “This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time”
All of the Chapter 11 bankruptcies by Trump’s businesses were submitted via a prepackaged bankruptcy, in which a deal had been reached with the creditors before filing.
COMPLETE LIST OF PRESIDENT TRUMP’S 6 BUSINESS BANKRUPTCIES:
1. Trump's Taj Mahal Bankruptcy in 1991 was the first of his Chapter 11 filings. The Taj Mahal (which is now The Hard Rock Hotel and Casino ) is located in Atlantic City and cost Trump $675 million in junk bonds at a 14% interest rate for the finalization of construction. Within a year, the casino owed 3 billion and Trump personally was liable for $900 million, forcing him to negotiate a deal with his lenders in order to keep the business alive. To lower his own interest rate and receive more time to repay his loans Trump sold his 220-foot yacht and his Trump Shuttle Airline and agreed to a bank-set limit on his spending. As for the company’s debt, Trump surrendered 50% his ownership and equity in the casino to the bondholders in exchange for lower interest rates and more time.
2. Trump Plaza in 1992 was another casino-hotel owned by Donald Trump. This casino was also located in Atlantic City and begun struggling to keep its business after the opening of the Taj Mahal. It was $550 million in debt. The bankruptcy terms were negotiated by Trump in 1992 by “debt restructuring” with the creditors of the plaza where $250 million of the debt was exchanged with $200 million of bonds to get a lower interest rate with an additional $100 million of preferred stocks. Trump also lost 50% ownership.
3. Trump Castle in 1992 was the third casino-hotel owned by Trump and going bankrupt in the same year as Trump Plaza. All three casinos in Atlantic City were competing against each other and all going bankrupt. A deal was struck with the bondholders giving them 50% of ownership in exchange for reduced interest rates and elimination of $25 million of the debt. The total debt before the deal for the Castle was $338 million. The Trump Castle is now known as the Golden Nugget.
4. Trump Plaza Hotel in Manhattan overlooking Central Park was the third Chapter 11 bankruptcy filed by Trump in the year 1992. This renowned New York hotel was $550 million in debt when Trump attempted to sell off several parts of it as condominiums but was unsuccessful. Instead, the banks took over 49% of the estate and forgave $250 million of the debt along with a reduced interest rate.
5. Trump Hotels and Casinos Resorts was an entity that Donald Trump had combined the Taj Mahal, Trump Plaza, and Trump Castle under in 1995. However in 2004, the company once again filed for bankruptcy as it was $1.8 billion in debt. Trump’s ownership of the company and casinos was reduced from 47% to 27%.
6. Trump Entertainment Resorts (TER) was what became of the Trump Hotels and Casinos Resorts after the 2004 bankruptcy. TER went bankrupt as well in 2009 after being in debt $1.2 billion. After arguments over restructuring, Trump again lost ownership down to 10% and resigned as chairman of the board. Later he sued TER stating that the company was no longer representing his name at the highest level as he would have. This lawsuit became the last straw and caused TER to go bankrupt again and close its doors for good.
Overall, the Trump Organization is involved with 515 subsidiaries and entities, of which 264 of them have Trumps name, and 54 have his initials. Of these businesses, the above-listed 6 have filed for bankruptcy, all under Chapter 11 “reorganization.”
I like that the Bankruptcy Code exists to allow us civilians to take risks without the fear of forever being in debt. Whether it's Chapter 7, Chapter 13, or Chapter 11, they all give us the ability for a fresh start. We can leave our debts in our past, and work towards a bright future. Very exciting to think about!
Call or text me for a FREE bankruptcy consultation. I will hold your hand through the very simple process, and answer every question you have.
-Lucas Ruffing
Bankruptcy Attorney
740-815-1114
LucasRuffingLaw@gmail.com