Some People Think Trump “Went Bankrupt.” REALLY?

We decided to settle this issue once and for all! We hear Trump bashers constantly say that Trump went bankrupt FOUR times.  REALLY?  Did he?  And what does that mean?

The tired story of Trump going bankrupt FOUR times shows a total lack of business sophistication and understanding.  Most people think that bankruptcy is when you “go bankrupt” and never pay your debts.  Well, that’s the basic concept in a typical personal bankruptcy.  But that’s NOT what Trump did in the business world.

Rather, Trump filed for Chapter 11 bankruptcy REORGANIZATION protection.  That means that he worked through a court-supervised period of business reorganization during which the business creditors were restricted from demanding immediate payments for a period of time while the company reorganized its debt and created a new business plan for moving the business forward. Indeed, in those four cases, the business ventures were reorganized, debtors were satisfied, and the businesses remained in operation to see another day.

By the way, those FOUR business ventures were among almost 600 business ventures that The Trump Organization engaged in.  That means that over 99% of the time, Trump was successful in business without needing to reorganize.  If he is anywhere near that successful as the Chief Executive of the USA, we would believe that we had died and awoken in Utopia!

People that cite these FOUR Chapter 11 REORGANIZATIONS act like they are stains on Trump’s character. Quite the opposite!  Our American system of Capitalism in built on the idea of PEOPLE taking calculated risks in business, locating venture capital, and competing in the marketplace of ideas. Sometimes they succeed and sometimes they fail.  Donald J. Trump is massively successful because he succeeded far more than he failed.

Anyone that mischaracterizes these Chapter 11 bankruptcies is really not very business savvy and doesn’t really have a very sophisticated understanding of how business works. Chapter 11 bankruptcy reorganization protection was specifically FORMULATED by the government for the precise reason that Trump used it. It is an important business tool that the government put in place to allow for businesses to SATISFY their creditors instead of just closing up the business and not paying anyone.

So I’m really sick of the Trump haters spewing one superficial misconception after another in their misguided attempts to destroy what they characterize as a “thrice-married cursing ex-casino owner.” Get over it, and get your facts straight before you gossip and bear false witness against people!

Limited liability corporations and public stock offerings are used to build business and value. This is the economic force that has propelled America to become the greatest economic powerhouse in the history of the PLANET!

A certain percentage of business ventures will fail – that is inevitable.  Just Google the phrase, “What percentage of businesses fail?”  You’ll be shocked to find numbers like 50% and 80% of businesses fail over time.  And by that standard, you will easily identify that Donald Trump is EXTREMELY successful beyond all of the wildest expectations in the business world!

So what does a Reorganization look like?

The economic engine in the USA is successful precisely BECAUSE of entrepreneurs forming Corporations that allow for protection from personal liability and loss in the event of a business failure.  A few (4) of Trump’s many hundreds of business ventures did suffer economic setbacks.  In each case, Trump used REORGANIZATION protection to make new business plans and figure out how he could re-capitalize the ventures to pay his creditors and keep the businesses in operation. And indeed, he was able to accomplish that, even at certain great cost to himself!  In one case, he sold his airline, Trump Airlines, to pay debtors.  He also sold his yacht, the second largest yacht in the world.

Trump further gave up 50% of his stock to his creditors (and eventually 90% later), and in return, the interest on the business loans was reduced from 14% to 8%.  That interest rate reduction hardly harmed the investors that had originally charged loan-shark rates precisely because they KNEW the casinos were a risky venture when they originally lent out the money. And finally, Trump stayed on as President of the venture WITHOUT PAY.  And even as he ultimately gave up 90% of the ownership to his creditors, he agreed to allow them to operate using his well-recognized Trump name, so that they would have a great chance of success.

Now understand that what Trump did represents the perfection of capitalism.  Men take risks and try to build things.  Sometimes they win, and sometimes they fail.  That is the essence of free market capitalism that has made America the greatest nation in the history of the planet!  But BEYOND THAT, when confronted with what would have appeared to be a hopeless economic setback by most other businessmen, Donald Trump DID NOT close up shop and leave his creditors to lose their investment.  RATHER, he used Chapter 11 bankruptcy REORGANIZATION protection to SALVAGE those businesses and to satisfy the creditors.  What a fair and principled businessman!

The Trump Organization has many other successful business ventures, including golf courses and office buildings and business success stories all over the WORLD. And Donald and the various stockholders have done very well in these businesses! This concept is the very BASIS for the economic success of the USA – the safety and ability to incorporate a particular entity (essentially create a form of personhood) and allow that entity to stand or fall on its own merit without affecting the other assets of the stockholders. That’s how every corporation in America is structured.

So this accusation about Trump going bankrupt is in fact a SIMPLISTIC talking point that has been put out there by Trump’s enemies for the consumption of uninformed dupes that have no business sophistication to understand what that even means.

We could go even deeper into economic concepts to explain that the banking system was even designed to have a certain percent of ventures go bankrupt.  That has to do with the way the Federal Reserve lends out money with interest that cannot possibly EVER be repaid, because the only money that exists is the money that they lent out. So some groups somewhere MUST default and be forgiven or the system just won’t function!

Trump has run hundreds of ventures and only four have used bankruptcy protection to reorganize.  And even those FOUR have been reorganized and continued operations.  That means that he has close to a 100% business success rate, and indeed, he has employed tens of thousands of people!

You now have taken under 5 minutes to read this and you now have enough of an education about business to not be duped anymore by this type of remark! Maybe the Trump bashers should take 5 minutes and get a brief education!