On the Subject of Donald Trump’s Bankruptcies

Published on August 30, 2016

We won't get too political here, but given that it's election season, and one of our major presidential candidates is a businessman with some familiarity with the bankruptcy process (and that we at Ledford, Wu & Borges, LLC happen to be bankruptcy attorneys), we saw fit to write this comment.

Hillary Clinton Judges Donald Trump's Business Prowess

According to Hillary Clinton, Donald Trump has "bankrupted his companies not once, not twice, but four times," a statement ranked "mostly true" by the website PolitiFact.

But what does this mean? Does it mean that Trump is a poor businessman? If so, this runs contrary to the bold claims he's made in debates and press conferences.

Bankruptcy Itself is Not Evidence of Failure

You cannot judge business prowess - or lack of it - based on bankruptcy alone.

Hillary Clinton, as Trump's political opponent, saw a clear opportunity to go on the attack because of his history with bankruptcy, and she took it. No matter which candidate you back for POTUS, you can't fault Clinton for raising the issue. It's just politics, after all.

But this brings us to the underlying message of Clinton's statement, which is that Trump is not the great businessman he claims to be, and his bankruptcies are evidence of failure.

Trump's Bankruptcies Aren't Surprising

As PolitiFact notes, "it's not accurate to say Trump is solely to blame" for the bankruptcies. PolitiFact goes on to list Trump's six bankruptcies (not just four, as Clinton stated). Many of these bankruptcies happened because of a downturn in the gambling industry, as well as the Great Recession of 2008.

And few of us were completely immune from the Great Recession.

Lawmakers and courts have designed bankruptcy as a relief valve. Fortune may take a nosedive, as it does for people from all walks of life - the parents of a seriously ill child, who struggle with thousands in medical debt; the man whose divorce has drastically increased his financial burden; and, yes, the businessman whose casinos didn't do as well as he'd hoped.