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They Will See How Great It Will Become 2009
When Donald Trump has been pressed on his casinos performance during his presidential campaign, he has repeatedly said he left Atlantic City at the right time.
Atlantic City is a disaster, and I did great in Atlantic City, he said during a Republican Party debate last September, according to a transcript. I knew when to get out. My timing was great. And I got a lot of credit for it.
That would suggest Mr. Trump willingly left sometime around 2006, the year that revenues peaked in Atlantic City and that Pennsylvania allowed its first casino to open, a development that marked the start of a rapid downward spiral in the city. The drop-off was exacerbated by the recession that began in 2008.
But in early 2009, as Trump casinos lurched toward bankruptcy for the fourth time, Mr. Trump was still trying to hang on. At loggerheads with board members who had been selected by bondholders after the 2004 bankruptcy, he offered to buy all or a part of the casino company bearing his name. He was rebuffed, and he quit the board soon after.
Testifying in bankruptcy court in Camden, N.J., Mr. Trump argued that the company could not use his name, since shortly before filing the bankruptcy it had stopped paying him the $166,000 a month he received under the services agreement. He testified that his brand was worth $3 billion. He also testified that he was personally negotiating the settlement of a lawsuit in Florida that would yield more than $100 million for the company.
Why Are Businesses Allowed To File For Bankruptcy
Bankruptcy is an important tool for businesses in Americaâs capitalist economy. The safety net of bankruptcy protections allows entrepreneurs to pursue big dreams without jeopardizing their personal finances. Corporate structure also provides a way for business owners to protect their personal funds. With a corporation, an owner or investor can only lose any money that theyâve put into the business or personally guaranteed.
Business bankruptcy offers an additional layer of protection for the business itself, as well as the investors or owners. A Chapter 11 bankruptcy can help a business survive a bad year, an expensive lawsuit, or a failed experiment. Without bankruptcy, businesses would be less willing to experiment with new product ideas and other potentially risky business concepts.
If businesses couldnât file for bankruptcy, one failed business could financially ruin an entrepreneur for life. Early in Americaâs history, a business failure could lead to prison time. The threat of debtorâs prison put a damper on peopleâs willingness to take big risks with their business ventures. It also made investors less inclined to consider new or risky ideas. Modern bankruptcy laws limit risk for investors, who help to fund new business innovations.
Without business bankruptcy, these iconic American brands and products might never have existed.
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It Will Be The Best 1996
Donald Trump has said that his brushes with financial disaster in the early 1990s reminded him of a lesson his father had taught him: Do not leave yourself on the hook for loans.
My father knew, like I knew, you dont personally guarantee, Mr. Trump is quoted saying in TrumpNation: The Art of Being the Donald, by Timothy L. OBrien, a former reporter for The Times. Ive told people I didnt follow my own advice.
His agreements with lenders and the two casino bankruptcies in those years still left Mr. Trump personally responsible for more than $100 million in debt, and his agreements had only delayed the day of reckoning to June 30, 1995.
He dealt with that danger by first shifting much of his personal debt onto his casinos, then onto a new group: .
Step 1 came in 1993, when his company sold more junk bonds, adding another $100 million in debt to the Trump Plaza casino. More than half of the new money went to pay off Mr. Trumps unrelated personal loans.
Then, in June 1995, with the risk of being forced into bankruptcy just weeks away, Mr. Trump shifted ownership of the Plaza casino to a new, publicly traded company: Trump Hotels and Casino Resorts. In the initial public offering, 10 million shares were sold at $14. At the same time, the company also sold another $155 million in junk bonds, at a 15.5 percent interest rate.
Indeed, the company posted losses of $66 million in 1996, $42 million in 1997 and $40 million in 1998. Those losses would continue.
If Trump Companies Can File For Bankruptcy Why Cant I
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In a Nutshell
Bankruptcy isnât something to be ashamed of. It helps businesses and people â including the former leader of the free world â escape from debt and move forward. Former President Donald Trump has repeatedly used bankruptcy to help his businesses and himself get ahead. This article discusses Donald Trumpâs bankruptcies and how they benefited his companies. It also addresses how personal bankruptcy compares to business bankruptcy and why both are necessary for a healthy economy.
Written byAttorney Paige Hooper.
Former President Donald Trump has repeatedly used bankruptcy to help his businesses and himself get ahead. Trump understands that filing for bankruptcy is nothing to be ashamed of. Instead, in some cases, bankruptcy is simply the best decision that a company can make to move forward financially. This logic doesnât only apply to businesses, though. Itâs also true for individuals and couples who file personal bankruptcy to address financial hardships and improve their financial situations.
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Trump: Good Or Bad Business Record
So how are we to rate Donald Trumps business acumen in relative terms? Is the cautious businessman who minimizes risk, rarely fails, and shows a moderate return better than the brash businessman who often takes on highly risky pursuits, strikes out a lot, but also hits his share of grand slams? Thats too subjective a question for us to answer, and the few numbers offered in this trope arent very informative.
Its an oft-cited statistic that Donald Trump has 515 companies, but a number of those businesses are only connected to him in tangential ways and arent owned or directly controlled by him.
Its also an oft-cited statistic that about 80-90% of businesses fail within the first year to eighteen months, but such numbers typically refer to startups and small businesses, while much of Donald Trumps business empire involves expanding and building on existing large business lines and ventures.
The most important takeaway from this trope might be that you cant sum up the world of big business. much less any presidential candidates qualifications, with a couple of numbers devoid of explanation or context.
Trump Hotel & Casino Resorts 2004
Trump didn’t go back to bankruptcy court again until November 2004, when he filed to shed debt at his various Atlantic City casinos and a riverboat in Indiana. It was another quick trip through bankruptcy court the company shed $500 million in debt and emerged from bankruptcy the following May. Trump turned over majority control of the company to his bondholders but remained the largest single shareholder, and he once again kept control of the casinos.
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Billionaire Trump Fleeces Workers Small Businesses
International President United Steelworkers union
Using rape-and-pillage corporate practices favored by Wall Street, Donald Trump made himself billions while swindling and bankrupting untold numbers of hourly workers and small businesses.
In recounting his deal-making experience, Trump says the important thing is that he made a buck, that he came out rich. He ignores the father of five who lost his business when a Trump casino didnt pay for cabinets. He discounts the minimum wage workers that a Trump resort cheated out of hundreds of dollars of overtime.
And that, Trump says, is how hed run the country. Trump said that as president hed treat the nations creditors the way he did the creditors in his repeated business bankruptcies, forcing them to accept pennies on the dollar owed. Somebody loses. But its never billionaire Trump. When Americans elect a president, they want a leader who will look out for the little guy, not take advantage of him. Exploiting the little guy and everybody else to make a buck for himself is Donald Trumps M.O. Thats not presidential.
The terrible tale of Trump casinos in Atlantic City illustrates his relationship with money, workers and small business. His casino companies went to bankruptcy court four times. Tradesmen, small businesses and creditors werent paid. But Trump made out like a bandit. And hes mighty proud of it.
General United States Bankruptcy Statistics
1. 62% of personal bankruptcies in the United States were due to medical expenses.
A study conducted by Harvard University has shown that, without doubt, the most significant of all US bankruptcy statistics is that nearly two-thirds of all bankruptcies were due to medical expenses. One of the most interesting figures to come out of this study was that 72% of the bankruptcy filings had come from people with some form of health insurance. While this was a shock, it also crushed the myth that medical bills only affect the uninsured.
Medical bankruptcy statistics show that people taken by a rare disease or some form of serious illness will be left with hundreds of thousands of dollars in medical bills. Medical bills of this size can easily wipe out any savings, equity accounts, and college funds and leave no other option but to go bankrupt. Eventually, a surge in the US bankruptcy rate is likely to happen.
Moreover, with advancements in technology, healthcare costs in the United States are at an all-time high. As new illnesses emerge and more people become patients, health insurance is becoming expensive and extremely confusing.
It is no secret that Americans face their greatest financial difficulties regarding medical care. Since 26% of Americans between the ages of 18 and 64 are struggling to pay their medical bills, its no wonder these bankruptcy filing statistics show that medical expenses cause more people to go bankrupt than anything else.
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Fourth Time’s A Charm: How Donald Trump Made Bankruptcy Work For Him
Trump Plaza, Atlantic City. Image via Flickr.
Here at FORBES, we’ve been tracking Donald Trump‘s wealth since the inaugural Forbes 400 rich list in 1982. Today, we value him at $2.7 billion, although he claims he’s worth far more. One question we’re often asked when talk turns to Trump’s fortune: how can a man who has been bankrupt so many times remain a multi-billionaire? How is he worth more now, post-bankruptcies? We spoke to bankruptcy lawyers and casino industry experts — some of whom have had firsthand involvement in Chapter 11 cases connected to Trump — in an attempt to explain how he has survived corporate bankruptcies and thrived in the aftermath.
1. It’s nothing personal…
First things first: Donald Trump has filed for corporate bankruptcy four times, in 1991, 1992, 2004 and 2009. All of these bankruptcies were connected to over-leveraged casino and hotel properties in Atlantic City, all of which are now operated under the banner of Trump Entertainment Resorts. He has never filed for personal bankruptcy — an important distinction when considering his ability to emerge relatively unscathed, at least financially.
“Corporations, limited partnerships, and LLCs in which he had an ownership interest or companies that had his name attached have filed for bankruptcy,” said Michael Viscount of Atlantic City law firm
In Presidential Bid)
2. …it’s just business.
3. It’s better than the alternative.
4. He’s leveraged his persona.
6. He’s not the one to blame.
A Trump Atlantic City Timeline
May 1984: Trump Plaza opens.
A second casino, Trump Castle, opens. It was later renamed the Trump Marina.
Trump opens the Taj Mahal, a 42-story, $1 billion casino-hotel, Atlantic Citys first mega-resort.
Trump Taj Mahal files for Chapter 11 bankruptcy protection.
Trump Plaza and Castle file prepackaged bankruptcy petitions to restructure their balance sheets.
Trump resigns from the board of directors of Trump Entertainment Resorts Inc., which declares bankruptcy.
The casino company again files for bankruptcy protection and Trump Plaza closes. Carl Icahn, who holds much of Trump Entertainments debt, gains control of it and the Taj Mahal.
: Hundreds of curious buyers line up for a liquidation sale at the Taj Mahal.
Staff writer Christian Hetrick contributed to this article.
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No Bankruptcy Is Not Synonymous With Success
Conversely, the absence of bankruptcy declarations is not an indicator of success, as many businesses fail without going through bankruptcy proceedings. A failed business may simply cease operations with the owners and investors absorbing the losses a troubled business on the brink of going under may seek to merge with another company that has the resources to keep it afloat and out of bankruptcy or a dying business may be bought up by another, stronger company, seeking to breathe new life into it or simply to acquire its assets.
And since many business conglomerates comprise multiple companies each of which may offer many different product lines a given company or product may fail spectacularly and rack up losses in the hundreds of millions of dollars without necessarily sending their corporate parents reeling into bankruptcy.
Finally, all bankruptcies are not created equal. A small startup partnership that doesnt quite take off soon enough and seeks bankruptcy protection is quite a different kettle of fish than the corporate entity that is mismanaged so badly and/or for so long that it racks up billions of dollars in debt before going Chapter 11.
Trump Has Filed For Six Business Bankruptcies
Trump, however, filed for bankruptcy regarding these companies:
Critics cite that the Trump corporate bankruptcies are examples of his inability to manage, his recklessness, and poor business acumen. Trump answers that criticism by stating he has used federal laws to protect his business interests. This idea is an example, he says, of his business insight and outstanding intelligence. Trump stated in August 2015:
I have used the laws of this country just like the greatest people that you read about every day in business have used the laws of this country, the chapter laws, to do a great job for my company, my employees, myself and my family.
In reporting from the New York Times, in 2016, Trump put up a small amount of his own money, moved personal debts to the casinos, and was awarded millions of dollars in salary, payments, and bonuses. The Times countered by sharing that the burden of his failures fell on the investors and those who bought into his business acumen self-assessment.
Three of the casino-related bankruptcies came about during the time of the early 1990s recession and the Gulf War crisis. Both of these situations made keeping Atlantic City, New Jersey gambling facilities face some hard times. At about this same time, Trump entered into a project that involved a Manhattan hotel and two casino holding companies.
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Our company is in the business of offering debt relief to our clients. Bankruptcy often includes shame, fear, and anxiety. We understand how you feel because we have helped so many in getting through what is a stressful time. We know how to confront the issues involved in individual and small business consumer bankruptcy, here in Philadelphia and surrounding areas.
Our most important desire to share our compassion and respect with you, our clients. Our lawyers are well-versed in providing bankruptcy services which include:
- Mortgage foreclosure assistance
- Medical debt cases
- Small business bankruptcy claims
When you call us, we will make an appointment for a free consultation if you are considering bankruptcy. Our no-pressure environment will allow you to share with us your financial situation, your options, and come up with the right solution for you. Once we have met, we will guide you in the areas of:
- The types of bankruptcy
Personal Vs Corporate Bankruptcy
One point of clarification: Trump has never filed personal bankruptcy, only corporate bankruptcy related to some of his business interests. I have never gone bankrupt, Trump has said.
Here is a look at the six Trump corporate bankruptcies. The details are a matter of public record and have been widely published by the news media and even discussed by Trump himself.
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Famous People That Went Bankrupt Before They Were Rich
A good friend once told me sometimes you have to take a step back to go forward.
Thats exactly what some famous, successful people did when they filed for bankruptcy. And most made it back to solvency.
Some even went well beyond their previous levels of wealth and fame after filing for bankruptcy.
In fact, for most it ended up being little more than a bump in the road of an otherwise successful life.
The point of this post isnt to recommend bankruptcy. But it is to show experiencing financial disaster isnt terminal! We all need to know this.