Alex Jones did it two years ago to avoid paying a $1.5 billion jury award for defaming the parents and relatives of the 2012 Sandy Hook massacre. Rudolph Giuliani did it just before Christmas to escape a $148 million jury award for defaming two Georgia election workers he falsely accused of vote tampering.
Now, there’s a good chance Donald Trump will do it, too, given that a judge on Friday ordered him to pay $454 million, including interest, for persistent business fraud, and the $88.3 million he already owed advice columnist E. Jean Carroll for defaming her and, after being found liable for defaming her, did it again.
It refers to seeking refuge from creditors in federal bankruptcy court. Ultimately, a bankruptcy filing is unlikely to save Trump from paying what he owes, according to Professor Gregory L. Germain, who teaches bankruptcy law at Syracuse University College of Law.
Germain, my law school colleague for many years, says what Trump can achieve is delays, but almost certainly not escaping paying, assuming he has the assets to fulfill the judgements against him.
Contrary to stories circulating widely on the internet, Trump has never filed bankruptcy, as I will explain below.
Delaying legal proceedings has always been Trump’s first strategy, taught to him more than a half century ago by the notorious Roy Cohn, a corrupt lawyer and political fixer.
Trump’s second strategy, also taught by Cohn, is to attack anyone who comes after you: federal prosecutors, housing or gambling regulators, journalists or political opponents are all corrupt and illegitimate, Cohn taught Trump to shout.
Trump’s third strategy — never admit even the slightest wrong or mistake no matter how powerful the evidence against you.
The immediate problem facing Trump isn’t the order by Justice Arthur Engoron removing Trump from running the Trump Organization for at least three years while putting in place an independent compliance director. It’s not the ill-gotten gains that the judge says trump must disgorge, $454 billion including interest so far.
The immediate problem is that three weeks from today is the deadline for Trump to appeal the $83.8 million award to E. Jean Carroll.
In a previous DCReport piece, I questioned whether Trump has the capacity to either deposit that much money with the court or to put up about $17 million to obtain a bond that will cover the entire amount should Trump prove unable to do so.
Trump’s first problem is how much cash he actually has. The second, should he seek a bond, is whether any financial institution would be foolish enough to guarantee the full $83.3 million in return for about a fifth of that amount upfront, and a promise by Trump that he will pay if his appeal fails.
Trump has little chance of prevailing on appeal, though he might get modest modifications of the three damage awards. Delaying payment will likely make him even worse off, assuming he actually is worth as much as he claims, a figure that changes from day to hour to minute.
Professor Germain notes that Trump could put his company, the Trump Organization, into bankruptcy, but that would not help him because he is personally liable as the sole owner for the judgments in all three cases.
“It wouldn’t do him any good to get his corporations discharged from bankruptcy because the debts are against Trump personally,” German said.
In bankruptcy proceedings, the responsibility of the trustee and the bankruptcy judge supervising the case is to extract maximum value from the businesses, bank accounts and other assets, known as the estate. The creditors, at the moment Carroll and the state of New York, would have to agree to any combination of asset sales and other actions to satisfy the debts, or press to liquidate the Trump organization.
But there are more civil cases pending against Trump, including those brought by Capitol Police officers who were injured when Trump sent a mob to the Capitol on January 6, 2021.
In 1990 his lawyers engineered a private equivalent of bankruptcy made possible because New Jersey casino regulators — in violation of their legal duty — took Trump’s side against bankers he owed $3 billion. At the time, Trump boasted that he was worth billions, but the public record showed he was underwater to the tune of almost $300 million. As I wrote in my 1992 casino expose´ Temples of Chance, in 1990 you were probably worth more than Donald Trump.
Later, his publicly traded casino company filed bankruptcy four times while Trump was its president, as he collected at least $83 million in compensation and benefits.
After Trump was, in effect, paid to go away, the casino company went bankrupt two more times before going out of business.
How a Trump personal bankruptcy would fare now can be gleaned from the Alex Jones and Rudy Giuliani filings.
Jones, who grew rich formulating conspiracy theories on his Info Wars internet program, repeatedly charged that the 2012 elementary school massacre was a hoax, and the grieving parents and other relatives were paid actors. The survivors filed a defamation case. A decade later a jury awarded the survivors $1.5 billion. Jones quickly sought refuge in federal bankruptcy court. So far Jones has paid nothing.
In October, a Texas judge ruled that Jones cannot use bankruptcy to avoid paying a $1.5 billion award for defaming the parents and relatives of the Sandy Hook massacre murders. Jones has yet to pay anything.
Similarly, Giuliani repeatedly insisted that two Georgia election workers, a mother and daughter, passed around a USB stick with fake election results despite clear evidence that this was untrue. After a jury awarded $148 million to the victims, who were harassed in their homes and repeatedly threatened with death, Giuliani walked onto the sidewalk outside the courthouse and declared he had spoken the truth about the two women and had done nothing wrong. One of his lawyers says that the once wealthy mayor of New York City is close to broke.
Giuliani is also under criminal indictment in Georgia over the same efforts by Trump and his confederates to steal the 2020 Georgia election.
Reprinted with permission from DC Report.