By Jon Berke
Not a moment goes by in the current political news cycle that doesn’t include a headline or punchline about presidential hopeful Donald Trump. For the sake of historical accuracy, a recent look through the Debtwire news archives should help clarify some common misconceptions about the real estate mogul’s history in bankruptcy court.
Trump was grilled on August 6 at the first GOP presidential debate for the 2016 season about the most recent Chapter 11 filing of a corporation sporting the Trump moniker. Fox News anchor Chris Wallace alleged Trump has “cost hundreds of jobs and deprived lenders of a $1 billion.”
In true Trump fashion, the tycoon threw out zingers like “lenders were killers,” Wallace was “living in a dream world,” and pointed out that he never declared personal bankruptcy.
The truth of the matter can be found somewhere in the middle. Long before Trump was known as a reality television star or a wannabe politician, his name was most recognizable as the larger-than-life owner of a casino-hotel empire. Trouble set in decades ago as each of the Atlantic City-based entities under Trump’s umbrella went through separate bankruptcies– the Trump Taj Mahal in 1991 and the Trump Plaza in 1992 –before reorganizing into Trump Hotels & Casino Resorts in 1995.
Trump Hotel & Casino Resorts kept the debt of its three New Jersey properties (including the Trump Marina, now known as the Golden Nugget) in separate silos and was eventually forced to use multiple private placements to refinance $1.9 billion in total debt. That burden led to another bankruptcy in 2004– the first as a collective company –and another renaming, to Trump Entertainment.
Fast-forward to 2009 when the global recession triggered Trump’s fourth trip through Chapter 11. This time the process resulted in Trump himself stepping away from the properties as his lenders, led by Carl Icahn, took over. Even the billionaire activist investor couldn’t save the ship, however, and Trump Entertainment filed for bankruptcy again last year. This time The Donald was only a belligerent bystander.
Mr. Trump sued his former company to clear up confusion over the “real” Trump properties, seeking to remove his name from the crumbling Trump Taj Mahal and Trump Plaza because the latest bankruptcy allegedly damaged his brand. A bankruptcy judge held off the suit, but the ultimate restructuring plan left Icahnwith only the Trump Taj Mahal – the Trump Marina was sold to the Golden Nugget, while Trump Plaza shut down in September 2014 after it was unable to find any buyers – and cut the company’s debt load from $285 million to $82 million.
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