Bankruptcy

If Donald Trump Believes that Bankruptcy Does Not involve Shame, Should You?

By Joseph McDaniel, Esq.

And the first time they see me, they are sometimes, although certainly not always, so overcome with emotion that they are remarkably inarticulate, even though they're clearly intelligent.

Some folks see the need to file a personal consumer bankruptcy as a source of sorrow, shame, and failure.

That's okay with me; most people just need time to let those feelings subside.

On the other hand, there are famous multi-millionaires, with private jets, and large equity stakes in billion-dollar corporations, and they have bad feelings about bankruptcy, too.

The first time.

Now, I'm the luckiest person in the world. I'm a bankruptcy attorney in the most beautiful city in the United States, Phoenix, Arizona. And I've been helping honest debtors cope with overwhelming debt for about thirty years, and I appreciate that privilege.

But I feel lucky, because many people don't love their work, and I do; I love helping people deal with overwhelming mountains of debt, and I like helping them move along the bumpy, bumpy bankruptcy road to a fresh start.

And I wish it was as easy as it looks to file bankruptcy as it looks on television, but if you do it right, it's a major pain in the backside, because you have to list all your debts, and all your assets; and if you fail to list a creditor, or list the creditor with an incorrect address, you may not get rid of that debt! So you really need to get it right, the first time!

But spine surgery is no fun either, and it can go wrong just like a bankruptcy, but when you need it, you need it. You know?

So I get up in the morning and talk about bankruptcy all day with people who have serious problems with debts. And at night I go home and think about my clients and how to fix their remarkably different problems (because banks have the same issues, day after day, but my clients find many interesting and unusual problems to bring to me!); I find that if I think about the issue before I go to sleep, the answer may pop out when I'm brushing my teeth the next morning.

Now, I've been blessed with wonderful clients.

And I've been doing this long enough that I've also been blessed with recurring clients. That is, sometimes a person is unlucky twice, and when they've been my client previously, they track me down for a second filing.

And that's very flattering, because there are so many lawyers who are instant bankruptcy experts that when somebody remembers the work I did for them, I appreciate it.

And sometimes I file for them again, and sometimes I tell them why they really shouldn't file right now, and what non-bankruptcy options might be a better fit for them.

On the other hand, some folks have commercial issues, and use bankruptcy as a commercial debt modulator (which sounds a little like the device that Marvin the Martian used in a Bugs Bunny cartoon to blow up the moon!).

One of those is Donald Trump, and I think he's gotten much more bad press than he deserves.

He's also a lucky guy, and he also works hard, and he inherited wealth and business savvy.

But even if you're lucky, businesses sometimes work well, and sometimes they work less well.

And the purpose of a business bankruptcy is to keep a business going, and keep people in their jobs at that business, and I heartily approve of that particular reason for a business bankruptcy, whether it's in Arizona or elsewhere.

But here's an article about The Donald, which I think is a little too harsh; he probably would be well advised to keep a slightly lower profile if he thinks he might have to use the Bankruptcy Courts in the future, just because! And when you read the article, remember as well that a corporation, or limited liability company, or partnership are all separate legal entities. If a guy own as corporation and the corporation files a bankruptcy, that's not the same thing as when the guy himself files a bankruptcy!

You know?

Here's the article:

Donald Trump Sees Bankruptcy as a Plus for Him
Written by Steve Marr

The gambling empire led by Donald Trump, Trump Hotels, and Casino Resorts, has been struggling for years under a mountain of debt and the pressure from stronger competitors.

In an effort to deal with the $1.8 billion in debt, a proposed restructuring bankruptcy deal is in the works. While the entire plan is very complex, here are several important points to know:

>Many of the bondholders will be required to reduce interest payments from 12% to 7.875%
>Some of the bondholders will be required to convert a portion of the debt to stock and a portion of the debt will be written off.
>In short, bondholders will receive less than agreed upon when the money was loaned, much less!

Donald Trump was quoted by the Now York Daily News as "really happy" with the restructuring agreement and sees no shame in placing the company in bankruptcy. "It doesn't matter," he said, "It's a modern day thing, a legal mechanism."

While Trump will have his personal ownership reduced from 56% to 25%, he will continue to receive a salary of $2 million per year, plus other lucrative benefits.

Bondholders stand to lose hundreds of millions of dollars on the restructuring deal, while Trump gets to keep a large piece of the equity? To Trump, that's just business. However, the words of King David sound like they were written for today, "The wicked borrows and does not pay back" (Psalm 37:21 NASB).

An unfortunate reality today is that many business owners and leaders use bankruptcy laws to maintain their position at the expense of the creditors. Trump could have reduced his stake to zero and forgone a salary to give the most back to the legitimate creditors, but as quoted, he's "really happy." Bondholders are not so happy.

When watching Trump on TV or reading about him, remember that while millions of Americans lose hundreds of millions of dollars in their personal investments and pension plans, Trump continues to collect $2 million a year while declaring "bankruptcy." It just doesn't add up.

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on June 21, 2010 (boomark / email).