Donald Trump has portrayed himself as a successful businessman who has amassed a net worth of as much as $10 billion. But he has also led some of his companies into bankruptcy, maneuvers he says were designed to restructure their massive debt.
The most interesting moment of the first republican debates for me personally was the confrontation of presidential candidate Donald Trump and Fox News host Chris Wallace. The latter asked an eccentric billionaire a head-on question: “How can we entrust the governance of a country to a person who has bankrupt his business four times in the past 25 years?”
“I acted within the laws of the United States and pursued the interests of my company, employees, family,” said Trump. - The greatest businessmen of the United States do the same. I've never been bankrupt! ”
Donald Trump likes to boast he has never filed bankruptcy and honestly, he has not ever filed bankruptcy personally. He has had numerous Companies though that he has owned and managed so poorly that he has had to file bankruptcy for at least 6 different companies.
Donald Trump and personal bankrtupcy
To understand Donald Trump and bankruptcy, one must first understand the distinction between personal finances and business finances. Businesses are separate entities according to the law. In particular, corporations have their own legal personhood. They are specifically created so that people can avoid personal financial liability if things happen to go wrong. With this in mind, Donald Trump has actually never declared personal bankruptcy. In each instance, his bankruptcy has been a result of a business failure rather than a personal failure.
The business bankruptcies of Donald Trump
While there are no personal bankruptcies in Donald Trump’s background, there have been many business failures in which his companies have been forced to take bankruptcy protection. There have been many Trump's business bankruptcies. Most of those have involved casinos. While Trump has tried hard in the casino business, he has had a number of failures there. On top of that, his Trump Plaza Hotel had to declare bankruptcy in order to seek ample protections.
Trump’s Businesses That Have Had Filed For Bankruptcy
1. Trump opened the $1.2 billion Taj Mahal Casino Resort in Atlantic City in April 1990. One year later, in the summer of 1991, it sought Chapter 11 bankruptcy protection because it was unable to generate enough gambling revenue to cover the massive costs of building the facility, particularly amid a recession.
2. The Castle Hotel & Casino entered bankruptcy in March 1992 and had the most difficulty of Trump's Atlantic City properties in covering its operational costs. The Trump Organization relinquished half of its holdings in the Castle to the bondholders.
3. The Plaza Casino was one of two Trump casinos in Atlantic City to enter bankruptcy in March 1992.
4. Trump's Plaza Hotel was more than $550 million in debt when it entered Chapter 11 bankruptcy in 1992.
5. Trump Hotels & Casino Resorts, a holding company for Trump's three casinos, entered Chapter 11 in November 2004 as part of a deal with bondholders to restructure $1.8 billion of debt.
6. Trump Entertainment Resorts, the casino holding company, entered Chapter 11 in February 2009 amid The Great Recession. The holding company emerged from bankruptcy in February 2016 and became a subsidiary of investor Carl Icahn's Icahn Enterprises.
Hillary Clinton mocked Donald Trump’s business failings in a major speech arguing that the presumptive Republican nominee would be disastrous for the economy.
"He’s written a lot of books about business. They all seem to end at Chapter 11," Clinton quipped, adding. "He bankrupted his companies not once, not twice, but four times."
Experts told us during the primary season Trump alone didn’t cause the bankruptcies. While six in 25 years is a lot, five were tied to a struggling gaming industry.
Trump was acting, they said, as any investor would. Investors often own many non-integrated companies, which they fund by taking on debt, and some of them inevitably file for bankruptcy, Adam Levitin, a law professor at Georgetown University, previously told us.
How is Donald Trump Able to File for Bankruptcy So Many Times?
People might ask "How is Donald Trump able to file for bankruptcy so many times?" The answer is "He didn't." Trump himself has never filed for bankruptcy. His corporations have filed for Chapter 11 bankruptcy four times.
By filing for Chapter 11 bankruptcy, the corporation is allowed to continue running while restructuring and reducing its debt. By allowing the business to continue, employees still have their jobs and the business is still making money. Corporate debts still need to be repaid but they may be reduced. The corporation must develop a repayment plan and corporate budget. Both must be approved by the creditors and by the bankruptcy court.
A corporation is a separate legal entity from its shareholders, other owners, board of directors, and CEO. Since it is a separate entity, the corporation files bankruptcy under its own name. In Chapter 11 bankruptcies, the owners’ personal assets are not at risk. The owners’ credit history remains intact.
Trump has been able to file for bankruptcy many times in part because bankruptcy is a relatively normal thing for highly leveraged companies. One type of bankruptcy allows a company to discharge all of its debt. Another form, known as Chapter 11, allows companies to restructure their debt and pay it off over time. Trump did this with his Taj Mahal when he struck a deal to give up equity in order to satisfy some of that debt.
 Fact Check: Has Trump declared bankruptcy four or six times? https://www.washingtonpost.com/politics/2016/live-updates/general-election/real-time-fact-checking-and-analysis-of-the-first-presidential-debate/fact-check-has-trump-declared-bankruptcy-four-or-six-times/?utm_term=.328a5f23e026
 Fourth Time's A Charm: How Donald Trump Made Bankruptcy Work For Him https://www.forbes.com/sites/clareoconnor/2011/04/29/fourth-times-a-charm-how-donald-trump-made-bankruptcy-work-for-him/#778817047ffa
 Trump slams Sears leadership after bankruptcy filing, saying the company was 'obviously improperly run for many years' https://www.businessinsider.com/trump-sears-bankruptcy-comments-2018-10
 A Saudi prince helped save Trump from bankruptcy twice https://finance.yahoo.com/news/saudi-prince-helped-save-trump-170443885.html