Nothing to do with Trump but this article is like an Obama strawman. The author says 1 in 5 PUBLIC companies with a balance sheet fatter than $1b have filed these past 30 years as if thats a small number. One in five is a GIANT number, several thousand percent greater than personal bankruptcies.
Second, he seems to think that somehow this sheds light on PRIVATE company filings. These casino deal are called SPE’s - they are created as “bankruptcy remote” vehicles to do off balance sheet deals specifically because everyone knows they can go DOWN DOWN DOWN, If you lend into the capital stack of an off balance sheet casino development you are using private money, not bank debt - no bank could ever do that. No public company could ever do that unless they had so much cash to put to work no one would care. You are lending at a very high yield coupon and accept all risk of default knowing your “promoter” isn’t pledged personally. The lenders are killers and the promoters are good track record people but all involved know what can happen. It’s all in a days work for a guy like Icahn or any other Hedge guy. And you can bet your tail that he sees nothing like a 1 in 5 rate of crash. Nothing like it.
Third, we’re talking 4 spe’s. How many deals do you think Trumps done over the years? 100? thats 4%. 200? thats 2%. 400? thats 1%. I’d guess its more than 400 but don’t know. Can you tell me anyone in any field of endeavor that has a success rate of over 99% ? You know Ben Carson doesn’t. You know NASA doesn’t. This article is an attempt by someone that knows nothing of which he;s discussing to try and make someone look bad. The only one that looks bad here is the author.
Lastly, inadvertently the article shows that Trump was actually a stand up guy in these Chapter 11’s. He’s still best buds with Icahn, proof enough. Each time he took a significant haircut, reduced ownership and sold assets. He took it on the chin and the Hedgies got losses to offset the capital gains taxes that they pay. Many operators back in the day before the laws changed would have collected all revenue in cash, buried it in coffee cans, burned the books, paid no one and left the taxpayers with the payroll tax bill.
“The author says 1 in 5 PUBLIC companies with a balance sheet fatter than $1b have filed these past 30 years as if thats a small number....
How many deals do you think Trumps done over the years? 100? thats 4%. 200? thats 2%. 400? thats 1%.”
Great synopsis of the situation! And thanks for the education on SPE’s and their distinctions from PUBLIC companies. While I am still hoping Cruz is at the top of the ticket, I’ll support Trump as I still haven’t seen that once he’s finalized a deal that he personally went back on his word. These bankruptcies were business - he’s a businessman dealing with the “big boys” and they all knew the risks and obviously were willing to accept them.
+1.