Tag

#junk-bonds

2 incidents

Updated June 21, 2016 Corruption & Self-Dealing
Major Abuse of Power

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

Trump's Atlantic City ventures were financed substantially through junk bonds. The Trump Taj Mahal opened in April 1990 carrying $675 million in junk bond debt at interest rates of 14 percent; by December 1990 it was behind on interest payments. The first bankruptcy followed in 1991. Trump subsequently filed bankruptcies involving his casino holdings in 1992, 2004, and 2009. In each restructuring, bondholders and creditors took substantial haircuts. Trump negotiated to retain management fees and significant equity stakes as conditions of restructuring. He ultimately sold his remaining stake in Trump Entertainment Resorts in 2009 and 2010. Trump characterized the repeated bankruptcies as smart use of the legal system; critics noted the losses were borne primarily by investors and creditors, not Trump personally.

Sources
4
Atlantic-Citycasinobankruptcypre-presidencycorruption
Updated February 17, 2009 Corruption & Self-Dealing
Major Abuse of Power

Casino Bankruptcies and Junk Bond Fraud: How Trump Used Other People's Money

Trump's Atlantic City casinos — the Taj Mahal, Plaza, Castle, and related entities — were financed with junk bonds carrying interest rates of 14-17%, which were unsustainable given the revenue the casinos could generate. Trump had collected hundreds of millions in management fees, licensing fees, and development profits before the bankruptcies. When the companies collapsed, thousands of bondholders, including retirees who had purchased the high-yield bonds, received pennies on the dollar or nothing.

Sources
4
bankruptcycasinoAtlantic-Cityjunk-bondspre-presidency