Trump Banks Takes Hit as Casinos Head for Third Bankruptcy

Donald Trump is not just a businessman but a brand.  From casinos, to condo developments, to television shows, colognes, and more, Trump has splashes is name across many a business.  But what does it say about the name when one of his flagship businesses - casinos - is close to defaulting on its debt and potentially file for bankruptcy for the third time?

Marketwatch is reporting that:

"Facing tough competition and sliding revenue amid the economic meltdown, Trump Entertainment Resorts will have to skip a $53.1 million interest payment scheduled for Monday on its 8.5% senior secured notes due 2015 in order to maintain sufficient liquidity."

Donald Trump has the role of non-executive chairman is the company.  He is the largest shareholder but is barred from having any direct business impact on the company because of restrictions placed on him from the company's two previous bankruptcies.  So, he can't be directly blamed for Trump Casino;s problems this time.

Trump's businesses are based on massive leverage.  He borrows heavily from banks and when times are good is able to use the capital to expand and grow quickly.  But when times are tough, the debt load his businesses and businesses bearing his name operate under become to heavy and they suffocate from debt.

On his show The Apprentice, Trump often spoke about the importance of brand and counseled his potential proteges to stay away from anything that would sully brand perception.  At what point does the Donald Trump brand suffer from repeated bankruptcies?  

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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