1. Donald Trump


It’s hard to believe that President Donald Trump was once “merely” known as a brash New York real estate developer with an outrageous hairstyle, high-profile romantic exploits, and a true gift for self-promotion. What was lesser known, though by no means secret, was that Trump-owned businesses declared bankruptcy no fewer than six times between 1991 and 2009.

Trump inherited the family business from his father, Fred Trump, a successful New York City builder and landlord. Whereas his father made his fortune building single-family homes, and later running large apartment complexes in New York’s outer boroughs, Donald went for bigger, flashier prizes: Manhattan high-rises, Atlantic City casinos, Florida resorts, and ultimately a network of branded hotels, casinos, golf courses, luxury residences, media productions, and random business ventures: Trump Steaks, Trump Water, Trump Vodka, and even a failed regional airline known as Trump Shuttle.

Many of his later ventures were low-risk licensing arrangements that found Trump charging impressive fees to attach his name to projects financed by others (Forbes contributor Steve Olenski describes how some of these arrangements worked). During the 2000s, Trump devoted much of his personal attention to high-profile media ventures, such as “The Apprentice,” “Celebrity Apprentice,” and the Miss Universe pageant.

What Happened

Six Trump-owned businesses filed Chapter 11 bankruptcy in the 1990s and 2000s, according to PolitiFact. Five were gaming enterprises, including the famed Trump Taj Mahal and its parent company, Trump Hotels and Casinos Resorts. Most bankruptcies occurred during or following the major real estate downturns of the early 1990s and mid- to late-2000s.

The first bankruptcy, filed in 1991, was arguably the most devastating for Trump’s lifestyle. Trump funded the $1 billion Trump Taj Mahal with loads of high-interest debt, and within a year of opening, the property was more than $3 billion in the hole. Trump was personally on the hook for $900 million. The eventual settlement required Trump to sell off Trump Shuttle and offload his personal yacht.

Subsequent Trump bankruptcies also involved eye-popping numbers. For example, Trump Hotels and Casinos Resorts was more than $1.8 billion in debt when it first filed for Chapter 11 in 2004 (a second filing came in 2009).

However, they didn’t affect his personal finances or lifestyle to the same extent, largely because Trump did not personally guarantee the loans that financed the struggling projects. Trump’s latter-year pursuit of low-risk licensing arrangements make it less likely that his ventures will face serious financial problems going forward – a fortuitous development for a presidential candidate.

Post-bankruptcy Activities

Following his most recent bankruptcy, Donald Trump sought the spotlight with renewed vigor. In 2011, he flirted with a presidential run, leveraging debunked theories of former President Obama’s foreign birth to ingratiate himself with the Republican Party’s disgruntled voter base. He abandoned his quest after the State of Hawaii released Obama’s long-form birth certificate, and subsequently endured a brutal roast (including from President Obama himself, as reported in the The New Yorker and elsewhere) at the 2011 White House Correspondents’ Dinner.

Trump’s humiliation in 2011 may well have hardened his political ambitions. In June 2015, he launched his first official presidential campaign with a rambling speech that scapegoated immigrants, ethnic minorities, and political elites. He spent the following 12 months in similar form, upending years of accumulated political wisdom with his bombast and dispatching a deep Republican primary field by May 2016. Then, seemingly against all odds, Trump narrowly defeated Democratic nominee Hillary Clinton in the 2016 general election. On January 20, 2017, he was sworn in as the 45th president of the United States.
Trump’s early presidency has been characterized by the same controversy and polarization that dogged – but didn’t derail – his candidacy. His administration’s adversarial relationship with the press delights Trump’s base and infuriates his detractors. Low-level scandals provide constant fodder for Washington, D.C.‘s chattering classes.

More ominously, the Trump campaign’s purported ties to Russia, and subsequent attempts to obstruct an FBI probe into the matter, remain the subject of a far-reaching Department of Justice investigation led by former FBI Director Robert S. Mueller III. (The Washington Post has a comprehensive timeline on the unfolding saga.) The affair has already ensnared several of Trump’s associates, and some political observers believe the affair poses a mortal threat to his presidency, but no one really knows how it will shake out.

No matter how Trump is remembered by historians of the future, one thing is for sure: The full story will be an engrossing read.

What We Can Learn

Politics aside, it’s heartening to see that serious financial troubles do not disqualify brash, self-described billionaires from the presidency.

More importantly, Trump’s financial history demonstrates that American bankruptcy laws function as a gaping escape hatch for businesspeople facing financial ruin. Trump successful used bankruptcy to salvage at least some of his fortune, and keep his business empire intact, when the going got tough. Aside from the 1991 bankruptcy, Trump’s successive brushes with insolvency did not adversely affect his personal wealth or lavish lifestyle. Whether his reputation survived unharmed is another question entirely.

Pro Tip: If you’re self-employed and have yet to form a business structure that can insulate your personal assets from your business activities, what are you waiting for? It certainly worked out for Trump.