“Adhering to another hallowed American tradition, he is threatening creditors with protracted litigation. . .(2004)”

Trump’s “Phoenix Penthouse” Bachelor pad, New York, c. 1975.

Jodie T Allen. “Trump’s Latest Chumps.” U.S. News & World Report 136.12 (2004): 35.


It’s hard to feel sorry for the creditors of Trump Hotels & Casino Resorts. True, they have been pressing the cash-strapped firm to do something about its near $2 billion in debt, even mumbling darkly about a trip to bankruptcy court. But on the theory that hurt me once shame on you, hurt me twice shame on me, the only fingers they can justly point are at themselves. After all, no one made them back that same “top drawer” entrepreneur who, in the 1990s, stiff-armed another bunch of billion-buck bondholders, while wiggling out of personal bankruptcy. Yes, we are talking about the Donald, the self-proclaimed Artist of the Deal, now at new heights of fame as the firer-in-chief on the TV hit The Apprentice and author of yet another bestselling book with the modest title How to Get Rich. Clearly, the backers of his ventures over the years didn’t read his books–or maybe they did.

“Don’t blame the Donald, blame his underwriters and bankers,” says Christopher Whalen, managing director of Institutional Risk Analytics, a financial research service. Whalen notes that Trump Hotels had to offer a sky-high 17.6 percent yield on its bond offering last March, a code-red warning for investors.

In the grand American tradition of buck-passing, Trump quite agrees that no fault should attach to him. “This has nothing to do with me,” he told the New York Times recently. Never mind that he is chairman and chief executive, holds 49 percent of the stock, and has garnered millions of dollars in management fees and perks from the company and its Atlantic City casino holdings, even as he has rebuilt his personal real-estate-based fortune to well over $1 billion, by his own count.

Outside investors in his gaming halls have not been so lucky. Trump took the Trump Taj Mahal and Trump Casino through bankruptcy in 1991 but persuaded bondholders–including some major institutional investors–to restake him. Starting in 1995, he melded his casino holdings into the publicly held Trump Hotels & Casino Resorts. Wall Street pushed the stock above 35 in 1996, but by 1998 it had fallen into single digits as the profitless company struggled even to pay interest on its $1.8 billion debt, let alone make the investments needed to keep up with flashy new competitors like the Borgata.

“These money traps are no longer special, and the Donald is no longer a young bull,” says Whalen. But Trump, whose executive vice president, Scott Butera, stoutly denied on CNN last week that Trump Hotels is near bankruptcy, is mightily resisting any effort to push his gaming properties into receivership, thereby wiping out the value of his stock. Adhering to another hallowed American tradition, he is threatening creditors with protracted litigation that would further erode, if not obliterate, any remaining value in the properties.

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