Filing for bankruptcy may be more common than you think; even Republican presidential frontrunner and real estate tycoon Donald Trump has filed for bankruptcy – four times!
“The Donald” may not have filed for bankruptcy personally, but his company has had its fair share of experience with Chapter 11, having declared corporate bankruptcy in 1991, 1992, 2004, and 2009. Let’s take a look at each of Trump’s four bankruptcies, and what they meant for both his personal and corporate wellbeing. At Michael F. Kanzer & Associates, PC of Brooklyn, we help individuals and businesses determine the best course of action when it comes to the legal aspects of their finances. Fill out this short form for a free consultation.
1991 – Trump Taj Mahal
Atlantic City hotel and casino Trump Taj Mahal opened its doors in 1990 with a guest appearance by Michael Jackson. Just days after its grand opening, money was coming in too quickly for the cashiers to keep up – causing slot machines to crash. But, that didn’t prevent Trump from filing for Chapter 11 bankruptcy when the Taj Mahal was just one-year-old.
The Trump Taj Mahal cost $1 billion to build, which was primarily financed on junk bonds. By 1991, Trump’s corporation was having trouble paying off the high interest rates, and for the only time in Trump’s bankruptcy history, his personal assets were at stake. After filing Chapter 11 bankruptcy, Trump was able to reorganize the casino’s debt, and protect almost $900 million of his own personal liabilities – but not without having to sell his yacht and airline, and give up half his stake in the casino.
1992 – The Plaza Hotel
Despite big dreams to make New York’s Plaza Hotel “the most luxurious hotel in the world,” just four years after it’s $390 million purchase, the Plaza was millions of dollars in debt. Again, Trump filed for bankruptcy – but this time was able to keep his personal assets separated.
As part of his restructuring plan, Trump agreed to allot 49% of the hotel’s stake to Citibank and other lenders. He was able to keep his Chief Executive title, but was forced to forgo any salary and contribution to the hotel’s day-to-day operations.
2004 – Trump Hotels and Casino Resorts
After over a decade without declaring bankruptcy, Trump’s company was facing nearly $1.8 billion in debt. In late 2004, Trump declared bankruptcy for a third time, offering to reduce his stake in his company to about 25%. In exchange for forfeiting the majority of his company, he would receive a new loan with a lower interest rate.
2009 – Trump Entertainment Resorts
Trump Entertainment Resorts – the company created from the 2004 bankruptcy restructuring – struggled to gain stability from its beginning in 2005. When unable to make a $53.1 million bond interest payment in December of 2008, Trump’s company filed for bankruptcy for the fourth time.
Days before the company’s bankruptcy filing, Trump and daughter, Ivanka, resigned from the company’s board and refused any part in the company, although eventually made a deal with bondholders that allowed him to retain 10% of the company.
For Trump, filing for Chapter 11 bankruptcy allowed him to restructure his debt into a more manageable number. While you may not be dealing with millions or billions of dollars of debt, filing for Chapter 11 may also be able to help you keep your assets and get out of debt more easily.
Contact a Brooklyn bankruptcy attorney at Michael F. Kanzer & Associates, P.C. to answer your bankruptcy questions and see if Chapter 11 bankruptcy is right for you. We have helped hundreds of individuals discharge their debts by providing our clients with expert protection against Chapter 7, Chapter 11, Chapter 12, and Chapter 13 bankruptcy for more than a decade.