How Trump Maneuvered His Way Out of Trouble in Chicago

on Oct28
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Before Mr. Trump defaulted, Fortress had expected to receive more than $300 million from his company: the $130 million in principal and roughly $185 million in anticipated interest and fees.

But Fortress and its partners — including Mr. Mnuchin’s Dune Capital, as well as Cerberus Capital Management, whose co-chief executive, Stephen A. Feinberg, would become a major Trump fund-raiser and go on to lead a White House advisory panel — quickly realized they wouldn’t ever collect that full amount.

Ultimately, Fortress settled for $48 million, which Mr. Trump wired to the firm in March 2012, according to people familiar with the deal.

The forgiven debts showed up in Mr. Trump’s tax returns. For 2010, Mr. Trump’s 401 Mezz Venture reported about $181 million in canceled debts. Two years later, DJT Holdings, an umbrella company that the Chicago project had been folded into, reported that another $105 million of debt had been forgiven. Most of that appears to reflect the unpaid Fortress sum.

In many ways, it repeated a pattern that had played out more than a decade earlier at Mr. Trump’s Atlantic City casinos: a cycle of defaulting on debts and then persuading already-burned lenders to cut him a break.

Mr. Trump’s companies got a pass on the money they owed on the Deutsche Bank loan, too.

The 2010 settlement gave Mr. Trump a couple of years to sell hotel units, condos and parking spaces to repay that loan, according to Steven R. Schlesinger, a lawyer who represented the Trump Organization in the Chicago litigation.

By 2012, the Trump Organization had drummed up about $235 million to repay the financial institutions to whom Deutsche Bank had sold pieces of the original loan. They included banks and asset managers in the United States, Germany, Ireland and China, according to court records.

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