Alittle history of The Donalds FAILURES
By 1990, the effects of recession left Trump unable to meet loan payments. Trump financed the construction of his
third casino, the $1 billion Taj Mahal, primarily with high-interest junk bonds. That put him at a disadvantage with
competitors who used more of their own money to finance their projects, industry experts have said. Things were so
bleak for Trump at this time that in the August 21, 1990 edition of the Jersey Record, columnist Mike Kelly wrote “If
we still had debtors’ prisons, Trump would be in the dungeon.” Kelly added that “Donald Trump is a Third World Nation.”
Although he shored up his businesses with additional loans and postponed interest payments, by 1991 increasing debt brought
Trump to business bankruptcy and the brink of personal bankruptcy. Banks and bond holders had lost hundreds of millions of
dollars, but opted to restructure his debt to avoid the risk of losing more money in court. The Taj Mahal re-emerged from
bankruptcy on Oct 5, 1991, with Trump ceding 50% ownership in the casino to the original bondholders in exchange for
lowered interest rates on the debt and more time to pay it off.
By 1994, Trump had eliminated a large portion of his $900 million personal debt and reduced significantly his nearly
$3.5 billion in business debt. While he was forced to relinquish the Trump Shuttle (which he had bought in 1989),
he managed to retain Trump Tower in New York City and control of his three casinos in Atlantic City. Chase Manhattan
Bank, which lent Trump the money to buy the West Side yards, his biggest Manhattan parcel, forced the sale of a parcel
to Asian developers.
In 1995, he combined his casino holdings into the publicly held Trump Hotels & Casino Resorts. Wall Street drove its
stock above $35 in 1996, but by 1998 it had fallen into single digits as the company remained profitless and struggled
to pay just the interest on its nearly $2 billion in debt. Under such financial pressure, the properties were unable
to make the improvements necessary for keeping up with their flashier competitors.
Problems loomed for Trump’s casino resorts. In a May 28, 2004, Wall Street Journal article, Trump said the specter of
bankruptcy bothered him “from a psychological standpoint,” but added, “it really wouldn’t matter that much.” A number
of his bondholders disagreed. In the same article, Meyer Marvald, a Florida retiree who said he owned about $44,000 of
the bonds, claimed “[Trump] has the Sword of Damocles hanging over our heads.” On October 21, 2004, Trump Hotels &
Casino Resorts announced a restructuring of its debt. The plan called for Trump’s individual ownership to be reduced
from 56 percent to 27 percent, with bondholders receiving stock in exchange for surrendering part of the debt. Since then,
Trump Hotels has been forced to seek voluntary bankruptcy protection to stay afloat. After the company applied for
Chapter 11 Protection in November, 2004, Trump relinquished his CEO position but retained a role as Chairman of the
Board. In May, 2005 the company re-emerged from bankruptcy as Trump Entertainment
Under Bankruptcy By Areas
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