It's usually his companies that go bankrupt
Conspiracy theorist Alex Jones did it two years ago. Rudolph Giuliani did it just before Christmas. Now there’s a very
good chance that before March 12, Donald Trump will join them in filing
personal bankruptcy.
Trump's going to need to sell a lot of sneakers, except that
according to the fine print on the order forms, he DOESN'T
have any - they will be shipped at some point in the f
uture or maybe never.
Trump would do so for the same reason as Jones and
Giuliani — to delay paying court-ordered awards for defamation.
Trump has never filed personal bankruptcy, as I will show
below. Doing so now might seem at first blush to ruin his brand, his polished
image as a multi-billionaire, a modern Midas who turns to gold all that he
touches.
But spinning a bankruptcy filing to his advantage would
be easy. Trump will tell his cultish believers that he is as rich as ever, but
he was forced to seek refuge in Bankruptcy Court by the
Marxist-Fascist-Corrupt-Deep State-Liberal-Radical cabal he blames for his
legal woes.
Appeal Deadline Looms
Monday, March 12, matters because that is the deadline
for Trump to appeal the $83.3 million a jury awarded to advice columnist E.
Jean Carroll for defaming her after a federal court jury awarded $5 million for
earlier defamation. Court rules require that, as a condition of appealing,
Trump, like all such litigants, must show that he has the money to pay the
jury’s award.
Trump’s options:
- pay the Carroll award, which I believe, knowing the man well, isn’t going to happen.
- post $83.3 million in cash with the federal court so he can appeal.
- obtain a bond guaranteeing payment of the award, which assumes that Trump can find a lender foolish enough to extend Trump credit.
In a previous DCReport piece, I questioned whether Trump has the
capacity to either deposit that much money with the court or obtain a bond that
will cover the entire amount should Trump prove unable to do so. After all, how
many actual billionaires hawk $399 gold sneakers and $99 perfume, a human
invention to hide stink?
But the Carroll award is not his only problem. On Friday,
Trump was ordered to disgorge ill-gotten gains from persistent business fraud.
With interest, he owes more than $450 million, a level of cash no one who
critically follows Trump believes he has.
Stopping The Clock
Filing for personal bankruptcy stops the clock on both
awards. That means he won’t need to deposit cash or get bonds to appeal the
Carroll and New York State civil fraud awards. The automatic stay to these and
other civil proceedings would benefit Trump by getting past what he sees as the
finish line: the Nov. 5 presidential election.
In the end, a bankruptcy filing won’t save Trump from
paying, according to Professor Gregory L. Germain, who teaches
bankruptcy law at Syracuse University College of Law.
Germain, my law school colleague for many years, says
that while Trump can achieve is delays, surely enough to get past Election Day.
That strategy worked for conspiracy theorist Alex Jones.
Two years after his bankruptcy filing Jones has yet to pay any of the $1.5
billion jury award for defaming the parents and relatives of the 2012 Sandy
Hook massacre. That more than two years have passed suggests Trump should have
no trouble getting past the election through this delaying tactic.
If you’re not familiar with Jones and his Info Wars internet program, he promotes not just
baseless conspiracy theories but far-out tin foil hat nonsense like his
assertions that “interdimensional beings” have taken over the
bodies of many humans, especially political leaders. Among the guests
Jones has fawned over: Donald Trump.
Jones Case
Jones repeatedly charged that the 2012 Sandy Hook
Elementary School massacre was a hoax, and the grieving parents and other
relatives were paid actors. The survivors filed a defamation case. A decade
later a jury awarded the survivors $1.5 billion. Jones quickly sought refuge in federal Bankruptcy Court.
In October, a Texas judge ruled that Jones cannot use bankruptcy to
avoid paying the $1.5 billion award. Jones has yet to pay anything.
Similarly, Giuliani repeatedly insisted that two Georgia election workers, a mother, and daughter, passed around a USB stick that altered the 2020 Georgia vote count, despite clear evidence that this was untrue.
After a jury awarded $148 million to the victims, who were
harassed in their homes and repeatedly threatened with death, Giuliani walked
onto the sidewalk outside the courthouse and declared he had spoken the truth
about the two women and had done nothing wrong. One of Giuliani’s lawyers says
that the once-wealthy mayor of New York City is close to broke.
Giuliani is also under criminal indictment in Georgia
over the same efforts by Trump and his confederates to steal the 2020 Georgia
election.
Delaying legal proceedings has always been Trump’s first
strategy, taught to him more than a half-century ago by the notorious Roy Cohn,
a corrupt lawyer, and political fixer.
Trump’s second strategy, also taught by Cohn, is to
attack anyone who comes after you: federal prosecutors, housing or gambling
regulators, journalists or political opponents are all corrupt and
illegitimate, Cohn taught Trump to shout.
Trump’s third strategy — is never to admit even the
slightest wrong or mistake, no matter how powerful the evidence against you.
Trump has little chance of prevailing on appeal in the
Carroll and New York State fraud cases, though he might get modest
modifications of the damage awards. Delaying payment will likely make him even
worse off, assuming he actually is worth as much as he claims, a figure that
changes from day to hour to minute depending, he has testified, on his mood.
Professor Germain notes that Trump could put his company,
the Trump Organization, into bankruptcy. However, that would not help because
he is personally liable as the sole owner for the judgments in all three cases.
“It wouldn’t do him any good to get his corporations
discharged from bankruptcy because the debts are against Trump personally,”
German said.
Maximum Value Principle
In bankruptcy proceedings, the responsibility of the trustee and the bankruptcy judge supervising the case is to extract maximum value from the businesses, bank accounts, and other assets, known as the estate.
The creditors, now primarily Carroll and the State of New York, would
have to agree to any combination of asset sales and other actions to satisfy
the debts, or press to liquidate the trump organization. But that could be
years off.
Also, there are more civil cases pending against Trump,
including those brought by Capitol police officers who were injured when Trump
sent a mob to the Capitol on Jan. 6, 2021.
Now for Trump’s bankruptcy history, which is the subject
of many factually wrong articles and claims.
In 1990 his lawyers engineered a private equivalent of bankruptcy made possible because New Jersey casino regulators — in violation of their legal duty — took Trump’s side against bankers he owed $3 billion.
At the
time, Trump boasted that he was worth billions, but the public record showed he
was underwater to the tune of almost $300 million. As I wrote in my 1992 casino
expose´ Temples of Chance, in 1990, you were probably worth more than
Donald Trump.
Later, his publicly traded casino company filed
bankruptcy four times while Trump was its president, even as he collected at least $83 million in compensation and
benefits.
After Trump was, in effect, paid to go away, the casino
company went bankrupt two more times before going out of business.
Trump has managed to trick tens of millions of Americans
into believing he is a business genius rather than a wealth-destroying con
artist. People who believe he is worth billions will believe him when he says
he only filed personal bankruptcy because they made him do it.
David Cay Johnston
co-founded DCReport. He is a best-selling author and investigative journalist
who for 13 years reported for The New York Times. Johnston is a specialist in
economics and tax issues. He won a 2001 Pulitzer Prize. He teaches at Syracuse
University College of Law.