The Story Trump Tells about Trump is Phony

Check out this Washington Post analysis of Trump’s four bankruptcies here.

Here are some selections from the larger article…

When Republican front-runner Donald J. Trump was pressed Thursday about his companies’ four bankruptcies in 18 years, the blustering business mogul called them routine corporate deals allowed by law and repeated by “many, many others on top of the business world.”

Yet missing from Trump’s retelling is that all four bankruptcies were high-profile embarrassments for his name-brand American empire. Amid some of the proceedings, the mogul poured in millions of dollars from his personal fortune to keep the restructurings alive.

To secure better deals or more time to pay off debts, Trump forfeited lucrative ownership stakes and allowed bankers, lawyers and bondholders to feast on his empire. In one deal involving hundreds of millions of dollars in debts he had personally guaranteed, he agreed to sell his airline and mega-yacht, and he allowed bankers to stipulate how much he could spend every month….

…But Trump was exaggerating, experts said, when he said that virtually every business leader has filed bankruptcy. An estimated 5 percent of the 500 biggest U.S. companies have filed for bankruptcy in the past two decades, Georgetown law professor Adam Levitin said.

A Chapter 11 filing, said Henry Sommer, editor in chief of the legal treatise Collier on Bankruptcy, can be a legitimate, respectable business response to corporate woes such as an industry shift or other nasty surprise — though, he added, it can also stem “from deals that were poorly put together to begin with….”

…The first Trump-tied bankruptcy, in 1991, was of Trump’s biggest Atlantic City casino, the Trump Taj Mahal, whose $1 billion construction was financed by junk bonds at a staggeringly high interest rate of 14 percent. Its glitzy unveiling fell flat amid slumps in Atlantic City and the broader U.S. economy, leaving the Trump firm more than $3 billion in debt.

Rather than the “fantastic deal” that Trump has celebrated, financial experts say the filing, and Trump’s guarantee of the debt, marked the moment when his personal fortunes were most in jeopardy….

…For a lower interest rate and more time to make loan payments at the Taj Mahal, Trump struck a deal with his lenders, giving up half his ownership and equity in the casino that bore his name. He also agreed to a bank-set limit on his personal spending and sold his airline, the Trump Shuttle, and his 282-foot yacht, the Trump Princess, which he had bought a few years earlier from the Sultan of Brunei….

…In 1992, one year after the humbling developments of Trump’s first business bankruptcy, the mogul was back in court with another Atlantic City mega-property, the Trump Plaza Hotel and Casino, crushed beneath $550 million in debt.

For easier repayment terms for those debts, Trump agreed to give up his 49 percent stake to a half-dozen lenders, including Citibank. Trump stayed on as chief executive, though the role was symbolic and declawed: He did not have a role in day-to-day decision-making, and he did not earn a salary.

In 2004, Trump faced his third corporate bankruptcy…underneath $1.8 billion in debt….

Trump brushed off the bankruptcy as “really just a technical thing” that touched only a small fraction of his net worth, telling the Associated Press then, “I don’t think it’s a failure, it’s a success.” But Trump also pumped $72 million of his personal fortune to help keep the restructuring afloat.

In 2009, Trump Entertainment Resorts, formed in the aftermath of the Trump empire’s bankruptcies, itself declared bankruptcy after missing a $53 million bond interest payment. The company, which ran the Trump Plaza and Trump Taj Mahal, was forced into court, scattering investors and sending its $4 share price plunging to about 25 cents.

After a messy, months-long sparring with the company’s board of directors on how to reshape the company and repay the debt, Trump resigned as chairman and left with a reduced corporate stake of about 10 percent, which allowed the company to use his name in licensing….

…Trump has often celebrated his foresight for pulling out of his Taj Mahal casino on the New Jersey coast, saying during the debate: “I had the good sense to leave Atlantic City. I left Atlantic City before it totally cratered. And I made a lot of money in Atlantic City, and I’m very proud of it….”

…But Trump’s multiple spells in bankruptcy court, and the little effect they have played on his abundant wealth, highlights the stiff gap between how businesses and consumers are treated amid financial strife. The Trump businesses, as with many companies, were afforded significant leeway in the hope they could recoup those massive debts.

[Dare we say they were too big to be allowed to fail…even though, by any market-related measure they did fail?]

This Vox analysis of Trump’s success being more about his inheritance than his putative business acumen is also worth reading.