June 9, 2016

Bankruptcies: Another reason even angry white guys should stay away from Trump

Sam Smith - There are several major reasons for bankruptcies. One is that uncontrollable external factors – like a major recession – critically change things for the worse. One is that people make financial choices beyond their capabilities. And another is that presumptively triumphant individuals or corporations make decisions that are just plain wrong, the sort of decisions you don’t want your president making.  

The story of Trump’s corporate bankruptcies clearly fall into the last  category. Four times.

And something that neither Trump nor the media give any time to is that those urt by bankruptcies are not merely the bankrupt and those institutions that loaned them money, but numerous employees and businesses to whom the corporation owes money

For example, The Street noted:

By 1991, Trump's corporation had filed for Chapter 11 bankruptcy protection from creditors of the Taj Mahal Casino Resort, which had cost $1 billion to build…  The only hiccup in the expedited six-week restructuring process came from a company called Dixie-Narco, which had supplied 1,350 bill-changing machines to the Taj Mahal, according to a New York Times report. Dixie-Narco said Trump had improperly solicited bondholders by saying its $6 million claim was worthless. The two sides reached a settlement for $2.4 million, with the Taj Mahal agreeing to give back 500 of the machines.

The Washington Post reported earlier this year:

Trump describes these bankruptcies as if no one was hurt in the process, except high rollers and sharks. He says that he has started hundreds of companies, but only used bankruptcy proceedings four times…. Michael d’Antonio, who wrote a recent biography of Trump, says that is an incomplete assessment. “But there were many people who weren’t wealthy who lost money on those bankruptcies,” he said. “Anyone who invested in a bond fund or who bought individual securities that were linked to his casinos lost money.”

… According to the New York Times, Wall Street banks remain hesitant to deal with Trump, due to the previous bankruptcies and his litigious nature. Federal Election Commission disclosures have shown that 15 companies associated with Trump owe more than $270 million to banks.

Not to mention small businesses to whom the Trump corporations owed money.

Last year  CNN described it this way:

Donald Trump brags about how well his businesses have fared in bankruptcy. And in fact, no major U.S. company has filed for Chapter 11 more than Trump's casino empire in the last 30 years….

Despite high profile examples, including General Motors, Lehman Brothers and most of the nation's major airlines, fewer than 20% of public companies with assets of $1 billion or more have filed for bankruptcy in the last 30 years, according to data from Bankruptcy.com and S&P Capital IQ.

Trump has never filed for personal bankruptcy. But he has filed four business bankruptcies, which Bankruptcy.com says makes Trump the top filer in recent decades. All of them were centered around casinos he used to own in Atlantic City. They were all Chapter 11 restructurings, which lets a company stay in business while shedding debt it owes to banks, employees and suppliers.

And this from Daily Kos:

The bankruptcies — starting with Trump Taj Mahal, which bankrupted about a year after Trump opened it using $675 million in patently unsustainable junk bonds — were less displays of cool resourcefulness than frantic episodes of Trump scrambling to bail on bank debt and keep his perennially overleveraged casinos from going belly up.

“The project was dangerous in the beginning,” said Bryant Simon, a historian and Temple University professor who authored “Boardwalk of Dreams: Atlantic City and the Fate of Urban America.”

“A lot of people got stuck holding the bag, and he didn’t. So people resented him for that and felt serious financial pain.”

And it wasn’t just faceless bankers who got burned in the bankruptcies.

In the 2009 case, unsecured creditors — low-level investors, contractors, small-time vendors — got less than a penny on the dollar for their claims against Trump Entertainment Resorts (Trump resigned as chairman four days before the bankruptcy filing).

Donald Trump's casinos are left to go into bankruptcy over and over again. Thousands of people lose their jobs and investors lose billions of dollars, a city is "Left to whither" …

If this really the guy you want to trust with the federal government?

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