Kevin D. Williamson:
Donald Trump is a habitual liar, and the thing about habitual liars is that they lie habitually.
In a testy exchange with former Florida governor Jeb Bush, Trump insisted that he’d never gone bankrupt, and that claims to the contrary are a lie. That’s the Trump magic right there: Lying about your business history is one thing, lying that your critics are lying about it is another.
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.
Trump’s first bankruptcy was in 1991 after he borrowed a stupidly irresponsible amount of money to finance that monument to excruciatingly bad taste known as the Trump Taj Mahal in Atlantic City. Trump is such a good manager that the casino’s slot machines began failing during its first week of business. Never one to let reality stand in the way of his confidence, Trump had financed the $1 billion project largely with junk bonds, which meant very high interest payments. Trump did not make enough money to meet his interest payment and so was forced into bankruptcy. His ownership of the casino was diluted, and he ended up having to give back 500 slot machines to the company that had provided them.
Trump himself was on the hook for nearly $1 billion in the deal, according to the New York Times, a sum that exceeded his net worth. He was forced to sell a fair amount of his personal property, including a yacht, as well as the failing air-shuttle service he’d been attempting to launch for some time. As Boston bankruptcy attorney Ted Connolly put it, Trump used the bankruptcy proceedings to negotiate away his personal liabilities while leaving the business saddled with debt. Unsurprisingly, the casino endured further financial problems, including bankruptcy. Trump’s ownership stake was diluted steadily, and he eventually was removed from the board. By the time of the casino’s most recent bankruptcy — which is to say, the bankruptcy it currently operates in — Trump could plausibly say that it wasn’t really his business any more, in spite of the fact that his name and face are all over it.
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. And in much the same way that he has contemplated putting his abortion-loving sister on the Supreme Court, he made his then-wife, Ivana, president of the Plaza. Once again, Trump was unable to make his debt-service payments. Once again, he lost much of his ownership stake — 49 percent went to Citibank — and, once again, he found himself having to run for the doors as parties with deeper pockets and more managerial acumen took over to clean up his mess. In the case of the Plaza, that was CDL Hotels International, of Singapore, and Prince Walid bin Talal, of Saudi Arabia. The Saudi prince laments that he was twice forced to “bail out” Donald Trump, whom he describes as a “disgrace to the United States.”
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.
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, inviting unkind rodential-nautical metaphors.
