Trump Plaza Hotel in Manhattan Files for Bankruptcy Protection

The Plaza Hotel in Manhattan, the iconic luxury property Trump had purchased in 1988 for $407.5 million, filed for Chapter 11 bankruptcy protection in November 1992 under the weight of over $550 million in debt. Trump had financed the purchase almost entirely with borrowed money, and the property’s revenues could not support the massive debt service requirements. The Plaza bankruptcy marked Trump’s fourth major bankruptcy filing in 1992, following the March bankruptcies of Trump Castle and Trump Plaza Casino in Atlantic City, and coming in the midst of a broader collapse of his overleveraged real estate and casino empire.

Overleveraged Luxury Asset

Trump had purchased the historic Plaza Hotel at the peak of the 1980s real estate boom, using it as a trophy property to bolster his image as a successful Manhattan real estate mogul. However, the purchase was financed with high-interest loans that the hotel’s operations could never realistically service. When the real estate market collapsed in the early 1990s recession, the Plaza’s occupancy rates and room rates fell, making it impossible to meet debt obligations. The bankruptcy revealed the fundamental weakness in Trump’s acquisition strategy: buying prestigious properties at inflated prices with unsustainable debt loads.

Creditors Take Control

As part of the bankruptcy restructuring, Trump gave up 49 percent of his ownership stake in the Plaza Hotel to a group of six lenders, led by Citibank. Despite losing controlling ownership, Trump negotiated an arrangement to remain as the hotel’s CEO, though without drawing a salary. This allowed him to maintain his public association with the glamorous property even as creditors effectively took control. The restructuring reduced the hotel’s debt service obligations, allowing it to emerge from bankruptcy, but left Trump as a minority owner in a property he had once touted as proof of his business acumen.

Fourth Bankruptcy in One Year

The Plaza Hotel bankruptcy was Trump’s fourth Chapter 11 filing in 1992 alone, demonstrating a pattern of serial over-leverage and financial failure across multiple business sectors. While Trump publicly characterized his use of bankruptcy as shrewd business strategy, the Plaza filing—like his casino bankruptcies—showed a consistent pattern of borrowing more money than his businesses could realistically repay, then forcing creditors to absorb losses when the debt became unsustainable. The Plaza ultimately survived under new ownership structures, but Trump’s majority stake and operational control were casualties of his aggressive debt financing.