Posted on 01/29/2016 10:53:18 AM PST by Kaslin
I'm sick of hearing media 'experts,' political pundits and citizens bash business people for things that are perfectly moral, ethical and legal because they have no acumen or experience in any of the subject matter. They've never paid a payroll, run a business, or dealt first-hand with operating a business. They are simply spewing useless garbage out of their mouth, as a result of their abject ignorance.
I've had hundreds of Tweets and Facebook comments bashing Donald Trump for his four business bankruptcies. This bothers me; not because I want people to support Mr. Trump, but because it reveals a level of stupidity and ignorance that is scary.
Donald Trump's first business bankruptcy was The Trump Taj Mahal in 1991. He gave up $1 billion in personal investments and half of his equity in the business to satisfy his personal guarantees. After all of his personal guarantees were paid back to the bank, the casino company went through Chapter 11 Bankruptcy and emerged. What would Trump bashers have preferred he do? Wipe out everything he owns, pay off all the debt, fire everyone and close the casino down? That's foolish. But, if you bash Trump for this bankruptcy that is exactly what you are suggesting. On the debate stage, Trump has said this about his use of bankruptcy code for his casinos: "I'm in business. I did a very good job."
Trump again invested millions of his dollars to acquire Trump Plaza Hotel in 1992. Again, it entered financial trouble and he gave up a substantial portion (big losses for him) of his investment and complied with the banks' demands to cede control to another party.
Trump Hotels and Casinos Resorts in 2004, which was majority-owned by people other than Trump, filed for chapter 11 bankruptcy. His stake was cut nearly in half. At the time, he told the Associated Press that the company represented less than one percent of his net worth.
Trump Entertainment Resorts in 2009 was the fourth infamous Trump bankruptcy. He lost the majority of his investment resulting in less than a 10 percent stake in the emerging business.
Each of these cases have a common theme. Donald Trump used his name to brand property investments with a host of other investors and managers. He invested over $1 billion in these properties which he later surrendered to banks to cover personal guarantees and satisfy the banks terms. Chapter 11 bankruptcy is a reorganization process. This form of bankruptcy is commonly used in business to allow an orderly and fair process to pay creditors and keep the business open. In many cases, the banking institutions behind the troubled debt prefer businesses to follow this route as it is managed by a federal court and provides certain tax benefits to all parties. This process is anything but running away from your debts.
An example of business bankruptcies is found in the airline industry. If you're foolish enough to bash Trump for keeping the businesses open through reorganization bankruptcy, perhaps you're just confused. Let me explain how. Remember when Aloha Airlines filed Chapter 7 bankruptcy in 2008, ceasing operations, leaving passengers stranded and many 'out in the cold' with tickets they had already purchased? Chapter 7 is what happens when the business is liquidated and closed, most unsecured debts don't get paid and the secured-lenders get pennies on the dollar, if anything. Maybe you thought Trump did that?
By contrast, Delta, United and American Airlines have all filed chapter 11 bankruptcy in the past 15 years. All three are now impressively profitable and employee a total of 246,000 people. So if you think we should judge any executive who took those three airlines through rough market turmoil and reorganization, which ultimately saved them from liquidation (chapter 7) bankruptcy, then you are foolish.
A corporation is a separate and legal entity. It may bare the name of a person, but it is not the person. Business people set up corporations to protect their family from unexpected market turmoil such as experienced in the Financial Crisis of 2009. Trump's casino adventures were ultimately just property investments; not his company. Let me explain.
Prior to selling it, I operated a corporation in which I held 100% of the equity. Inside that corporation, it operated several limited liability companies (LLC). Some had my personal brand name. Some did not. My corporation (which was 100% owned by me) would own a percentage of each of these new companies with partners.
Our one mistake with these companies? We had personal guarantees on some of the debt. Had I not allowed banks to manipulate us into those personal guarantees, those entities could have survived through Chapter 11 restructuring. Instead, we closed or consolidated those affected LLC's to protect the personal guarantors from further liability.
The point here is that Trump quickly learned to keep the personal guarantees away from the businesses so he wouldn't be forced to conflate his personal interests with that of his partnerships. Keeping them separate helped the businesses continue.
Aside from my personal home, I'll never sign a personal guarantee on my businesses again. The business can use it's own balance sheet and profit-and-loss statement to secure financing. Ultimately, my businesses are investments. I'll invest my cash into the business, which puts it at risk, but I will not put my families' assets on the line outside my initial investment. If you think there is something wrong with that, you're foolish. If you haven't done it, don't bash those who have.
Banks don't play fair. When they have all the leverage, they will take all or more than they are owed at the absolute worst time.
Trump has learned that lesson. He's not foolish. Bash him for the reorganization of companies, baring his name through chapter 11 bankruptcy, you're the fool.
Don't wish to vote for him for any other legitimate reason? That makes you an American.
Had I not allowed banks to manipulate us into those personal guarantees, those entities could have survived through Chapter 11 restructuring.
Someone who makes a statement like this in a public venue has zero credibility. Nobody manipulated you, dude. You signed the papers yourself, so you are responsible for your actions.
I don’t know how much of this stems from America’s latent hatred of business. Hollywood never portrayed a businessman as anything but the villain and maybe the impression stuck.
Or it could be socialism’s fear and loathing of capitalism. At any rate, it’s as ingrained as TV commercials that show the husband as a boob with a smarter wife. We come to resemble how we are portrayed.
And yet, there’s hope. To this day, Michael Douglas gets a majority of fans thinking Gordon Gekko’s “greed is good” was a breath of fresh air. It irritates him.
Logical and coherent. Thanks.
What’s that sound?
Sound like people jumping.
GOPe jumping.
Jumping in the band wagon.
That list is extensive!
Why? Yeb!'s number's are growing. The slugfest between Cruz and Trump is opening the door wider and wider for him to gain traction and use those blocking candidates to get a foothold. Yeb!'s now within the margin of error for second place in New Hampshire, where he should be dead.
GOPe's plan is working out great - get the eggs into one basket and smash it. They'll hand the keys to the White House to Hillary rather than risk having their apple cart overturned.
I think there may be more of a fear of corporations as entities than there is of capitalism itself amongst many independents.
It's not hatred for business; it's hatred for dishonestly gaming the system to get rich by taking wealth from others, as opposed to building it. Look at David Packard by comparison. NOBODY criticizes him for how he went about building HP. Similarly, James J. Hill is lionized as a hero for the way he built Great Northern Railway, while Cornelius Vanderbilt is properly reviled as a crony capitalist. There are those who create and build and those who simply manipulate, grab, and accumulate.
So, look at Trump's record in business and what you'll see is a grandstanding crook who didn't make it as big as he claims. Hardly someone to emulate, much less elevate.
Dopey comment. He’s saying I should have negotiated better and gotten things non-recourse so those entities could have used Chapter 11. Because he gave a personal guarantee on 100% it wasn’t an option.
I don’t know what makes someone go independent other than disgust with both parties. Being unable to choose between the free market and over-regulation is a foreign mindset to me.
OMG this crap again. Business is business - it’s only immoral when you don’t do it right. Did you read the article? Did you like the Hawaii way or the still in business airline doing it the right way. If Trump was a crook with all the people like you out there and all the lefty Manhattan DA’s and US Atty’s he’d have been in jail a long time ago.
It’s crazy.
Jeb was down and out.
The Donald singlehandedly brought him back to life.
From what I understand, Trump himself didn’t go bankrupt, it was some of his developments that did. Liberal media never get their facts straight.
Are you planning to carry your hatred beyond the primaries and into the general election? What if Trump is the next president? Will you hate him then, too?
He should have just said that. Instead, he made it sound like the banks did something wrong in his case.
I think doing business of any kind can be fraught with unforseen pitfalls. the banks have (effectively) infinite pockets and (effectively) infinitely good memory and experience. OTOH, we humans all start from zero, which makes the human experience in contrast to the corporate experience a learning experience. I would imagine that coming up the speed of the banks from a standing start could be challenging for you, me, and anyone (including Trump). IIRC some founding fathers, including presidents (eg Jefferson) either died penniless, or came close to it. Yet few would dispute that they accomplished a lot for the good of most if not all.
In pioneer days, people would not infrequently go bankrupt, then they would simply start over (perhaps moving to another state and/or changing careers), and amass an even larger fortune. This could happen multiple times. Often the better persons would then honor their debts. It was a pioneer spirit. It was a part of existence in those days. For better or otherwise, Trump seems to have part of that pioneer spirit in him.
That is probably the most amusing statement I've read today.
Please, do expand on how it is apparently all Trump's fault? I'll just sit over here reading the latest issue of National Review.
A one-two Trump-Cruz was unbeatable.
Open convention now is possible.
My father had a bankruptcy. So did my main business partner, before we became partners.
When you are self-employed and the govt changes the rules in the middle of a 5-8 year project, yes, you might go bankrupt.
There are also different types of bankruptcy. Chapter 7 is when you lose it all, like my partner did.
Chapter 11 is a reorganization and partial forgiveness of debts. That’s what my father had to do.
Volker took my partner down, Reagan took my father down.
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