Whatever happened to the huge debt Trump was going to face after leaving office?

Wasn’t outgoing President Trump facing collection of something like 400 million dollars a few months later? Summer of 2021 maybe? I think it involved heavily leveraged properties that had become much less profitable during the pandemic. Whatever became of that story?

Do you have some articles you can point to talking about this?

Without more info I would say that there is evidence Trump operated along these lines:

[Donald Trump] understood a famous axiom: If you owe the bank $1 million and can’t pay, you’re in trouble, but if you owe the bank $1 billion and can’t pay, the bank’s in trouble. The moment that captured his strategy perfectly came when Trump’s CFO received an $800,000 quarterly insurance bill for Trump’s yacht, Trump Princess, which was, of course, mortgaged. He simply sent the bill to the Bank of Boston, which held the note on the boat, with a reminder that if the Princess sank uninsured, there’d be no collateral for the loan. The bank paid the bill.

— Geoff Colvin in Ex-CEOs should learn from The Donald, Wall $treet Week, 13 May 2008.

From an August 2020 article:

On financial disclosure forms, Trump has reported holding 14 loans on 12 proper­ties. At least six of those loans, representing about $479 million in debt, are due over the next four years.]

Bolding mine.
So, I would assume that nothing much has happened yet.

As I understood it, some of those properties were remortgaged but Trump had to personally guarantee repayment. What he’s done his career until now is keep each property separate, so that when it tanks (as many seem to) it has no effect on him and the hefty management and naming fees he has charged the property.

Now, as time goes on, he will have to personally pay off each of those loans if the properties fail to pay their own way. He may get a respite with the few hundred million in donations he’s collected that can be used to fight the steal and also applied to any other cause he chooses.

But allegedly most of his properties have suffered badly from COVID and publicity issues. Even his golf courses are apparently losing money.

The other issue is, now that his financial shortcomings (or, depending on perspective and analysis, lack of shortcomings) are more open to scrutiny, the banks have more of the upper hand. He may get predatory refinancing on untenable terms and eke out another few years.

… putting Trump into default meaning that the bank would have been able to enforce its mortgage/s and sell Trump’s assets. The bank would also have added the insurance bill onto the loan balance.

The bank still has the upper hand while it holds security to a value higher than outstanding loan amount.

Allegedly a key Trump strategy was use of questionable or indeed fraudulent valuations, to enable him to borrow inordinate amounts.

The old saying that you quote only really holds good if the bank is under secured.

Yes, but is your understanding accurate?

One of the hallmarks of Trump’s finances is that he doesn’t put his personal assets on the line in any deals. It’s always done through shell companies and legally separate corporations. So were those re-mortgages done by Donald Trump personally, or one of his companies like the Trump Organization?

Plus there’s the question of what personal assets he has (other than stock in these various companies), and if those assets are actually worth their supposed value. [I understand one of the investigations into his finances has uncovered multiple properties where he has told the government tax people that this is worth $25 million, but told a bank loaning money on it that it is worth $75 million. So who knows what the real value is?]

On a possibly related tangent…

I seem to remember some politician from maybe 20 years ago (municipality? county? state legislature?) who, either during or after leaving office, owed a sizable debt from his career in office.

The public was ticked-off at him, since he HAD MONEY.

Unfortunately, there was a law in place which forbids politicians from paying debts out of their own pocket. :face_with_raised_eyebrow:

The rationale was to prevent the unfair advantage rich people had to simply buy their way out of trouble.

You’re likely thinking of former Senator (and astronaut) John Glenn, who borrowed millions of dollars to support his presidential campaign in 1984. FEC rules only allowed him to use a small amount of his significant personal wealth to pay off the debt, and he was still trying to pay it off 20 years later.

I read an article the other day about his financial people bowing out and putting him at arms length.

Trump Organization’s accounting firm says it can no longer vouch for financial statements from the company

Just saw the following on CNN today:

" As David Leonhardt noted in September 2020:

“In the 1990s, Mr. Trump nearly ruined himself by personally guaranteeing hundreds of millions of dollars in loans, and he has since said that he regretted doing so. But he has taken the same step again, his tax records show. He appears to be responsible for loans totaling $421 million, most of which is coming due within four years.”"

https://www.cnn.com/2022/02/17/politics/donald-trump-wealth-rich/index.html

Trump made over 200 million in a real estate deal in California a few months ago. He will probably try to stiff his personal debt just on general principles but he has no shortage of cash at the moment.

He recently sold a Beverly Hills home for $13 million. Every little bit helps.

Also, the new social media platform the family is creating has been structured in a very unusual way so that they are guaranteed several hundred million in profit when it starts.

Trump is good at financial deals. Having no scruples helps. He will fight in the courts no matter what the deal is right up to the point where it costs him money. Then he settles and moves to the next case.

As I understand it, he is forcing the RNC to pay his legal bills since the lawsuits threaten his political future and so he can’t be expected to shoulder the burden by himself. Several million loyal “useful idiots” are available to pay the freight.

He’s got a SPAC funding his DOA twitter rival that’s going to rake in billions from the rubes. Trump might go down for fraud or any number of other crimes, but unless the thronging masses start to see through his bullshit, he’s not going to lack for their money.

I recall something that the deal had problems:
https://www.institutionalinvestor.com/article/b1wgp8v822h22v/Donald-Trump-s-New-Media-Company-Is-the-Top-SPAC-Short-of-2022

Technically, the blank company that then merges cannot be built with a particular merger target in mind - but indications are (surprise) that in this case, it was intended to merge with Trump’s media company all along.

DWAC is a SPAC, or so-called special purpose acquisition company. SPACs raise money from equity markets and then set out to identify other firms to merge with, creating a publicly traded entity of the merged firms.

More analysis:
https://www.cnn.com/2021/12/14/investing/trump-spac-dwac/index.html

Donald Trump and two of his children have been ordered by a New York judge to appear for a deposition within the next three weeks, as part of the billowing investigation over alleged fraud in the valuation of assets belonging to his family business.

The James investigation, combined with its criminal Manhattan equivalent, are now top of the league of a plethora of legal troubles facing the former occupant of the White House. A Guardian tally this month found that Trump was facing a total of 19 legal challenges, six of which involve alleged financial irregularities.

Once the bank knows the insurance has lapsed, why wouldn’t they just repossess the boat and auction it off?

See my post above.

The position may have been that the bank was owed more than the security it held. That puts the bank into difficulties. It has two options. Call in the loans, sell up the assets over which it has security and eat the loss. Or wait and see if it all comes good. Not an easy call.

Banks really hate repossessing things. There is a huge amount of messing about and they suddenly own something that they have no expertise in, or interest in owning. So they need to sell it, and that takes time and money, and is pretty much guaranteed to go for a fire sale price. Something like a high end luxury yacht may take a year to sell. They depreciate worse than just about any asset you can name, and chew through serious money just to keep afloat. They really need a professional crew keeping it alive, which will now be on the bank’s dime, or the value will drop like a stone. Let alone mooring fees, and as we see, insurance. Repossessing a yacht is going to be close to a worst case outcome for any bank. Lots of incentive to hang on and hope.

The “failing New York Times” did a major series of stories on Trump’s finances back in 2020, including the issue of personal loan guarantees:

I’ve not read the article (paywall) but worth noting that the headline saying “chronic losses” may have a lot less to it than meets the eye. Chronic losses for tax purposes are SOP for real estate investments. For some reason (probably simplicity) the accounting rules allow for depreciation of the value even when the property is not actually decreasing in value.

I myself own an investment property and it has been cash flow positive over the years and is also worth about 80% more than I paid for it. But I’ve never been taxed on the income and if you look at my tax forms you would see years of “chronic losses” relating to this investment.

Of course, the tax bill eventually comes due if you sell, since the cost basis is the (much lower) depreciated basis and not the actual amount you paid for it. But if you don’t sell then it never comes due, and there are also some strategies for dealing with it as well.

That is only a problem if the rules apply to you. Explaining away the circumstances is what lawyers are for. Being a lawyer for Trump must be tough. Bad cases, lots of publicity, knowing that your client has a long-time practice of stiffing contractors, and on the other hand lots of hours to bill. I wonder if working as a Trump lawyer hurts one’s future job prospects. Probably not if you have a strong stomach.