Trump's Six Bankruptcies: Pattern of Borrowing Heavily and Walking Away

Between 1991 and 2009, Donald Trump’s hotel and casino businesses filed for Chapter 11 bankruptcy protection six times, establishing a clear pattern: borrow heavily using high-interest debt and other people’s money, operate businesses unprofitably or make unrealistic revenue projections, and when debt service becomes unsustainable, use bankruptcy protection to force creditors to absorb billions in losses while Trump personally walks away with reduced ownership stakes but continued income from licensing fees and management contracts. The six bankruptcies—Trump Taj Mahal (1991), Trump Castle (1992), Trump Plaza Casino (1992), Plaza Hotel Manhattan (1992), Trump Hotels and Casino Resorts (2004), and Trump Entertainment Resorts (2009)—cost bondholders, banks, and small business creditors billions of dollars while Trump personally avoided bankruptcy and continued profiting from the failed enterprises.

The Leverage-and-Default Model

Trump’s business model relied on extreme leverage, consistently borrowing far more than his businesses could realistically service through operations. The Trump Taj Mahal, for example, was financed with $675 million in junk bonds at 14 percent interest rates—debt levels that required impossibly high casino revenues to service. When Trump promised the New Jersey Casino Control Commission he would use low-interest bank loans, he instead turned to junk bonds, paying roughly 50 percent more in financing costs than projected. This pattern repeated across his properties: acquire or build assets using maximum debt, extract fees and payments during operations, and when the debt becomes unsustainable, restructure through Chapter 11 bankruptcy.

Creditors Lose Billions, Trump Profits

Congressional testimony documented that Trump “earned millions” even as his Atlantic City casinos went bankrupt multiple times. While bondholders—many of them retirees who had invested their savings—saw their investments collapse, and while small businesses that built Trump’s properties were forced to accept pennies on the dollar, Trump structured his deals to ensure personal profit regardless of business outcomes. He extracted management fees, consulting payments, and licensing royalties even from failing companies. When businesses collapsed, he used Chapter 11 protection not to reorganize and repay creditors, but to force debt forgiveness while retaining partial ownership and ongoing licensing income.

Personal Immunity from Business Failure

Critically, Trump avoided personal bankruptcy despite the six corporate bankruptcies, having structured deals to limit his personal liability exposure. While he personally guaranteed some debts in the early 1990s—facing up to $833 million in personal liability during the Taj Mahal crisis—he successfully negotiated those obligations down by selling personal assets like his yacht and airline while creditors absorbed the majority of losses. In later bankruptcies, Trump held equity stakes and licensing agreements that insulated him from personal financial ruin even as his companies destroyed shareholder value.

“Genius” or Massive Failure?

Trump later defended his serial bankruptcies as evidence of business savvy, claiming he used bankruptcy laws strategically to benefit his businesses. However, bankruptcy law experts noted that Trump’s repeated use of Chapter 11 demonstrated not genius, but serial business failure and a willingness to externalize costs onto others. A truly successful businessman, they argued, would not need to repeatedly use bankruptcy protection. The pattern established in Atlantic City—borrow unsustainably, operate unprofitably, force creditors to absorb losses, personally profit regardless—would repeat throughout Trump’s business career and later inform his approach to governance as president, where he consistently prioritized personal benefit over institutional integrity or public interest.