Donald Trump hasn’t stopped telling us how great of a businessman he is. Included in Trump’s schtick is his bragging about how he’s making fantastic deals with the Chinese. Another part of Mr. Trump’s schtick is talking about how “America doesn’t win anymore” and how America will win again once he’s elected president. Kevin Williamson’s article is utterly devastating. Consider Williamson’s article the official death of Trump’s schtick.
Williamson starts by saying “Trump has a peculiar way of speaking about bankruptcy: He has a deep aversion to the word itself. He speaks of “putting a company into a chapter” without ever answering the implicit question: “Chapter of what? Moby-Dick?” The answer, of course, is the U.S. Bankruptcy Code, to which Trump has taken recourse at least four times over the course of his business career. The chapter in question is the famous Chapter 11, which applies to business bankruptcies. Trump proudly insists that he never has had recourse to Chapter 13, the personal bankruptcy code. This is his apparent justification for saying that he’s never been bankrupt. But of course one of the purposes of Chapter 11 bankruptcy is to keep men such as Donald Trump out of Chapter 13 bankruptcy.”
While that’s a hard-hitting bit of truth, that isn’t the information that will sting Trump the most. This is pretty damaging:
In 2004, Trump Hotels and Casino Resorts, a holding company for various Trump properties including the Taj Mahal and a riverboat-gambling company in Gary, Ind., went into bankruptcy, having acquired $1.8 billion in debt while raising only $130 million through an initial public stock offering. Same story: Trump had borrowed too much money, at a rate he could not afford (15 percent, in fact, which lets you know how credit-worthy the market deems Trump to be), and once again he was obliged to give up most of his ownership stake.
It’s stunning to hear that Trump had to pay a 15% interest rate on anything in 2004. As Williamson said that “lets you know how credit-worthy the market deems Trump to be.” (Not very!) Though that’s devastating, Williamson isn’t done. Here’s more:
Trump’s second bankruptcy came with his acquisition of New York City’s Plaza Hotel. The great dealmaker did essentially the same thing with the Plaza that he had done with the Taj Mahal: He borrowed too much money at rates he could not afford.
Sensing a pattern? If not, you’re a Trump supporter. It gets worse:
Trump Hotels and Casino Resorts was reorganized as Trump Entertainment Resorts . . . which promptly went bankrupt, filing for Chapter 11 protection in 2009. (That’s right: Trump, who wants to be president of these United States, was in bankruptcy that recently.) Too much debt at an interest rate that he couldn’t afford to pay? Check. Loss of ownership? Check. Trump and his daughter, Ivanka, both resigned from the board just before the bankruptcy filing.
The great businessman who insists he’ll negotiate fantastic deals specializes in negotiating terrible deals that have led him into bankruptcy court 4 times. Each time, Mr. Trump did the same thing. He “borrowed too much money at rates he couldn’t afford.” Shouldn’t he have figured out that he was repeating the same mistake after his second bankruptcy?
Trump, the great negotiator, didn’t learn after his second bankruptcy. Trump didn’t learn after his third bankruptcy. I don’t know that he’s learned after his fourth bankruptcy caused by “borrowing too much money at rates he couldn’t afford.” Rather than him campaigning on the slogan that he’ll “Make America great again”, shouldn’t he pay attention to his businesses and keep them from going bankrupt?
Technorati: Donald Trump, Chapter 11 Bankrptcy, Chapter 13 Bankruptcy, Trump Towers, Trump Hotel and Casinos, Make America Great Again, Junk Bonds, Trump Taj Mahal, National Review Online, Republicans, Election 2016
Gary. Thanks. That is a good link. I will follow the full item, and appreciate your excerpting.
Chapter 11 is the reorganization chapter. Chapter 7 is the liquidation chapter; where the vultures pick the bones of a completely failed venture.
A good part of a thorough history would be how/when the Chapter 11 proceedings terminated; and how/when the entity in each instance emerged from Chapter 11.
Did any shift from Chapter 11 to Chapter 7? Did debt get refinanced in instances, with healthy entities emerging? That outcome is not uncommon, although I expect that more often a Chapter 7 liquidation ensues.
Just saying: Half a loaf is better than no bread at all, if you are hungry for bread; half a story is not better than a complete one, if you hunger for facts.
Not that I have answers. But I do have questions.
Gary or readers, if you know of any online resource on the outcomes of Trump entity bankruptcies, please in a comment give a link. It would be good to know, As with a follow the money look at candidate Rubio.
Gary, it’s Wednesday and Trump is reported to have won in Nevada; but I have not seen turnout or percentages reported yet online. What do you and readers think of the thought that between Cruz and Rubio and their people, if Trump wins big on Super Tuesday that they form an early ticket with the one having then the higher delegate count behind Trump having first spot and the other taking second? Are the personalities fit for that kind of pragmatism? From the outside, it seems not so, but within the GOP there may be a better sense of what’s attainable.
The Hill reports percentages in Nevada, not turnout, with some interesting twists:
“With 100 percent of precincts reporting, Trump won with 45.91 percent of the vote, followed by Rubio with 23.85 percent and Ted Cruz with 21.38 percent.
“It was Trump’s largest victory of the nominating cycle.
“Trump’s win comes as he sweeps all ideological segments, according to MSNBC’s exit polling. He edged out Cruz with the very conservative segment, 38 percent to Cruz’s 34 percent. And he blew out the field with somewhat conservatives, of which he won 47 percent, and with moderates, of which he won 56 percent.
“He also topped Cruz among evangelical voters, winning 41 percent of that bloc.
“Trump won with Hispanic voters in Nevada, too, according to entrance polls. He won 44 percent of the Hispanic vote in MSNBC’s entrance polls, compared to Rubio’s 29 percent and Cruz’s 18 percent.
” ‘This is not a factional candidate. This is a candidate with broad appeal across the board in the Republican Party,’ MSNBC analyst Steve Kornacki said as he went through the exit poll numbers.”
It surely appears Super Tuesday will be the moment of reckoning for the money backing Cruz and backing Rubio. Spending to buy nothing is not an eternal commitment.