Atlantic City Casino Bankruptcies: Six Failures, Contractors and Bondholders Left Unpaid

Overview

Trump's Atlantic City casinos went through six bankruptcy filings. Bondholders lost billions. Contractors were unpaid. The casinos eventually closed. Trump collected management fees and salary throughout, received more than $1 billion in personal income from properties that collectively lost $1.2 billion, and described the experience as proof of his business skill.

The Debt Structure

The Trump Taj Mahal opened in 1990 carrying $675 million in junk bond debt at 14 percent interest. Casino analysts said at the time that no Atlantic City property could generate the revenue needed to service that debt. The Taj Mahal was the largest casino in the world when it opened. It was behind on interest payments within months.

The debt was not a calculation error or an unforeseen market event. The Taj Mahal's finances were visible before it opened. The bond offering documents contained the numbers. The question was who would absorb the loss when the inevitable came.

The Restructuring Pattern

Each bankruptcy followed the same pattern: too much debt, missed interest payments, restructuring negotiations, creditors accepting less than owed, Trump negotiating to retain management fees and a reduced equity position.

The management fee arrangements were particularly significant. Trump's organization received fees from the casinos he had loaded with debt — income from properties that were failing to pay their creditors. In each restructuring, Trump negotiated to preserve these arrangements as a condition of cooperation.

The Numbers

The New York Times 2016 analysis documented the result: Trump received more than $1.1 billion in income from Atlantic City casinos between 1995 and 2009. The casinos collectively lost more than $1.2 billion in the same period. Bondholders and investors lost billions more in the restructurings.

Trump's response during the 2016 campaign was consistent: he had used the bankruptcy laws as the best businesspeople use them, he had made money personally, and the creditors who lost money had known what they were investing in.

He was correct that the bankruptcy laws worked as designed — for him. The creditors, contractors, and Atlantic City workers who bore the losses of the successive failures were less enthusiastic about his account of his business acumen.