Used Law to Protect Interests
Critics have cited the Trump corporate bankruptcies as examples of his recklessness and inability to manage, but the real estate developer, casino operator, and former reality-television star says his use of federal law to protect his interests illustrates his sharp business acumen.
Trump said in August 2015:
"I have used the laws of this country just like the greatest people that you read about every day in business have used the laws of this country, the chapter laws, to do a great job for my company, my employees, myself and my family.”
Used Little of Own Money
The New York Times, which conducted an analysis of regulatory reviews, court records, and security filings, found otherwise, however. It reported in 2016 that Trump "put up little of his own money, shifted personal debts to the casinos and collected millions of dollars in salary, bonuses, and other payments.
"The burden of his failures," according to the newspaper, "fell on investors and others who had bet on his business acumen."
6 Corporate Bankruptcies
Trump has filed Chapter 11 bankruptcy for his companies six times. Three of the casino bankruptcies came during the recession of the early 1990s and the Gulf War, both of which contributed to hard times in Atlantic City, New Jersey's gambling facilities. He also entered a Manhattan hotel and two casino holding companies into bankruptcy.
Chapter 11 bankruptcy allows companies to restructure or wipe away much of their debt to other companies, creditors, and shareholders while remaining in business but under the supervision of a bankruptcy court. Chapter 11 is often called "reorganization" because it allows the business to emerge from the process more efficient and on good terms with its creditors.
Personal vs. Corporate Bankruptcy
One point of clarification: Trump has never filed personal bankruptcy, only corporate bankruptcy related to some of his business interests. “I have never gone bankrupt,” Trump has said.
Here is a look at the six Trump corporate bankruptcies. The details are a matter of public record and have been widely published by the news media and even discussed by Trump himself.
1991: Trump Taj Mahal
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Craig Allen / Getty Images
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. Trump was forced to relinquish half of his ownership in the casino and sell off his yacht and his airline. The bondholders were awarded lower interest payments.
Trump's Taj Mahal was described as the eighth wonder of the world and the largest casino in the world. The casino covered 4.2 million square feet on 17 acres of land. Its operations were said to have cannibalized the revenue of Trump's Plaza and Castle casinos.
"Your wish is our command. ... Our wish is that your experience here be filled with magic and enchantment," the resort staff promised at the time. More than 60,000 people a day visited the Taj Mahal in its opening days. The Taj Mahal emerged from bankruptcy within weeks of its filing but was later closed.
1992: Trump Castle Hotel & Casino
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Leif Skoogfors / Getty Images Contributor
The Castle Hotel & Casino entered bankruptcy in March 1992 and had the most difficulty among Trump's Atlantic City properties in covering its operational costs. The Trump Organization relinquished half of its holdings in the Castle to the bondholders. Trump opened the Castle in 1985. The casino remains in operation under new ownership and a new name, the Golden Nugget.
1992: Trump Plaza Casino
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Craig Allen / Getty Images
The Plaza Casino was the other Trump casino in Atlantic City to enter bankruptcy in March 1992 (in addition to the Castle Hotel & Casino). The 39-story, 612-room Plaza opened on the Atlantic City boardwalk in May 1984 after Trump struck a deal to build the casino with Harrah’s Entertainment. Trump Plaza closed in September 2014, putting more than 1,000 people out of work.
1992: Trump Plaza Hotel
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Paweł Marynowski / Wikimedia Commons
Trump's Plaza Hotel was more than $550 million in debt when it entered Chapter 11 bankruptcy in 1992. Trump gave up a 49% stake in the company to lenders, as well as his salary and his day-to-day role in its operations.
The hotel, overlooking Central Park in Manhattan from its location on Fifth Avenue, entered bankruptcy because it could not pay its annual debt service payments. Trump bought the hotel for about $407 million in 1988. He later sold a controlling stake in the property, which remains in operation.
2004: Trump Hotels & Casino Resorts
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Craig Allen / Getty Images
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. Earlier that year, the holding company posted a first-quarter loss of $48 million, double its losses for the same quarter the previous year. The company said its gambling take was down nearly $11 million across all three casinos.
The holding company emerged from bankruptcy less than a year later, in May 2005, with a new name: Trump Entertainment Resorts Inc. Chapter 11 restructuring reduced the company's debt by about $600 million and cut interest payments by $102 million annually. Trump relinquished the majority control to bondholders and gave up his title of chief executive officer, according to The Press of Atlantic City.
2009: Trump Entertainment Resorts
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Joe McNally / Getty Images
Trump Entertainment Resorts, the casino holding company, entered Chapter 11 in February 2009 amid The Great Recession. Atlantic City casinos were also hurting, according to published reports, because of new competition from across the state line in Pennsylvania, where slot machines had come online and were drawing gamblers.
The holding company emerged from bankruptcy in February 2016 and became a subsidiary of investor Carl Icahn's Icahn Enterprises. Icahn took over the Taj Mahal then sold it in 2017 to Hard Rock International, which renovated, rebranded, and reopened the property in 2018.
