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Donald Trump Bankruptcy

Article Overview: When you hear the name Donald Trump, chances are that the first thing to pop into your head is not bankruptcy. Today, the Trump brand has come to symbolize all that is lavish and extravagant. From his marble-lined hotels to his billion-dollar golf courses, little about Donald Trump would suggest bankruptcy. However, in his early years, Donald Trump was no different from every other entrepreneur who struggles to grow their business. In fact, he came so close to the brink of bankruptcy on more than one occasion that his success today is all the more remarkable.

Donald Trump Bankruptcy

When you hear the name Donald Trump, chances are that the first thing to pop into your head is not bankruptcy. Today, the Trump brand has come to symbolize all that is lavish and extravagant. From his marble-lined hotels to his billion-dollar golf courses, little about Donald Trump would suggest bankruptcy. However, in his early years, Donald Trump was no different from every other entrepreneur who struggles to grow their business. In fact, he came so close to the brink of bankruptcy on more than one occasion that his success today is all the more remarkable.

During the 1990s, this real estate mogul began to suffer the effects of recession like everyone else. He had used high-interest junk bonds to finance the $1 billion construction of his third casino, the Taj Mahal, and was now paying the price. In 1991, he was forced to declare business insolvency, as he had $3.5 billion in outstanding loans. With a $900 million personal debt, he was almost forced to declare personal ruin as well.

Banks and bondholders, who had lost millions of dollars due to his liquidation, decided to restructure his debt. In return for lower interest rates and more time to pay back his debt, he ceded half of the ownership of the Taj Mahal to its original bondholders. In less than a few months, the casino had re-emerged.

That would not be the end of the bankruptcy story for Donald Trump. One year later, on November 2, 1992, the Trump Plaza Hotel was forced to declare bankruptcy. This time, Donald Trump agreed to give up 49 percent of the hotel to Citibank and five other lenders. In return, Donald Trump was given a similar deal as before, with more lenient conditions to repay the $550 million still outstanding. Donald Trump stayed on as chief executive, but his salary was taken away.

Two years later, the majority of his personal debt had been repaid, as had his business debt. However, the experience had taken its toll on the businessman. He had been forced to give up the Trump Shuttle he had purchased in 1989, although he did manage to keep both Trump Tower and his three casinos in Atlantic City.

In 1995, he combined his holdings into the Trump Hotel & Casino Resorts. It was originally trading for $35 on Wall Street, but this price had fallen into the single digits just two years later. Again, he was facing economic collapse. His company was not turning a profit and still owed $2 billion in debt. In a 2004 interview with the Wall Street Journal, he admitted that the situation was bothering him “from a psychological viewpoint.”

Determined to avoid bankruptcy again, Donald Trump decided to restructure his debt in 2004 by reducing his individual ownership from 56 to 27 percent and by giving bondholders stock in exchange for some of the debt they were owed. The plan still couldn’t keep Trump Hotels from seeking voluntary bankruptcy protection. Finally, in May 2005, after Donald Trump had given up his CEO position of the company, it emerged from bankruptcy as the new Trump Entertainment Resorts Holdings.

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Article Tags: 1 billion, bondholders, brink, business debt, businessman, citibank, donald trump, golf courses, high interest, insolvency, junk bonds, liquidation, november 2, personal debt, real estate mogul, recession, ruin, shu, taj mahal, trump plaza hotel



Related Forum Posts
Re: How important is your name? - [quote="BuzzAroundBooks":19d1cpro] For instance, Donald Trump built his company's brand around his name, so he probably naturally wanted to call his son Donald Trump Jr. to continue the legacy.[/quote:19d1cpro] I wonder if it is a good thing to call one's son Jr.... or the third, or the fourth. On the one hand, it implies a long legacy of family achievement, but on the other hand, some kids really resent the pressure put on them by being the son of a famous father, and daughters of a famous mother, so it's really hard to say. Indeed, it would be intersting to have a survey of every successsful child of a successful parent, to see if those who are a "Jr." are more successful than those who were given their own name.
Trump's Favourite Books - In an interview with The Wall Street Journal, Donald Trump said he enjoyed reading biographies: "I like to read about philosophers - particularly Socrates, who emphasizes you should follow the convictions of your own conscience, which basically means thinking for yourself, a philosophy I tend to agree with." Just an interesting factoid...So, even Trump looks to those who came before him for strategies of success!
Trump and Stewart - I really enjoyed Trump: The Art of the Deal and The Martha Rules. I think the best advice you can get is from people who have made it and not just consultants who haven't been there. Evan's site is great because of all the famous entrepreneurs and their advice directly from them. Donald Trump and Martha Stewart are 2 great examples of successful entrepreneurs and the books are written in their own words which I find extremely valuable and motivational.
How Reliable is Alexa? - Thanks Carson - how reliable to do you find Alexa? Is it accurate? I know evan's site gets a lot of traffic because he has great writers like Donald Trump but how do we know that it's really 77,804 (way more popular than mine!) of all the websites out there? who makes the decision on the rankings?
What have you trademarked? - Trademarking can a difficult and time consuming process. It also doesn't always work out (ie. Donald Trump was not able to trademark the phrase "You're Fired") What have you trademarked and has it helped your business?


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