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Trump Hotels files for bankruptcy

The flagship company of flamboyant businessman Donald Trump has filed for voluntary bankruptcy in the US. Trump Hotels & Casino Resorts has gone into Chapter 11 protection as it tries to restructure $1.8bn (£969m) in debt. Chapter 11 protection gives businesses time to rearrange their finances while continuing to trade.

Mr Trump struck a deal with bondholders last month that will cut his stake in the company but preserve his role as chairman and chief executive.

Mr Trump - or "The Donald" as he prefers to be known - was both famous and notorious during the hey-day of 1980s takeover capitalism. In recent years he had remarkable success with the television series The Apprentice, where he teaches young and eager would-be managers how to run a company.

Unsuccessful candidates who have failed to meet Mr Trump's expectations on how to run a business are told "you are fired" - a catch phrase that has entered popular culture in the United States.

The plan calls for bondholders to exchange their debt for $74m in cash, $395m in shares and $1.25bn in new publicly traded debt. Mr Trump's stake in the company will be cut from 56% to 27%.

Morgan Stanley has agreed to provide $500m to renovate and upgrade the casinos and fund a push into new markets. Beal Bank has committed $100m in interim financing. A proposed deal with Credit Suisse First Boston announced in August was later scrapped.

It is the second time Mr Trump's casino empire has sought bankruptcy protection. In 1992, Trump's Atlantic City casinos filed for Chapter 11 after buckling under the weight of $1bn in debt.

He later regained control of those properties. Mr Trump's major casinos in New Jersey - Trump Taj Mahal, Trump Plaza Hotel and Casino and Trump Marina Hotel Casino - have suffered from increased competition in the past year.

And while he no longer owns the building that made him famous, Trump International Hotel and Tower in New York, he has become something of a television star.

 
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