Trump and Today’s America
Part of the Trump Brand has come about from a success story that has arisen due to being able to overcome being bankrupt. Trump turned around and transformed the brand of a Reality TV show series by the name of, “The Apprentice,” to eventually triumph from TV into becoming the President of the United States of America. Did his bankruptcy define his business? Most likely not. A story emerged, one of a businessman transition to the leadership of a country.
The Decision to File
Of course, filing a bankruptcy is a huge decision. Sometimes the trigger can be circumstances beyond control. Even in today’s age, there may still be a stigma applied, as some view it as a moral failure. As it stands and within a year, we have seen corporate bankruptcies at their highest point.
When a company files for a Chapter 11 bankruptcy, it seeks protection from creditors in trying to restructure debt. The judge oversees this. Effectively, it transfers the ownership of the company from shareholders to the creditors. For the most part, shareholders are the ones that suffer the greatest loss. Creditors are normally made whole.
What is at Stake?
The tax scheme makes allowances when creditors and shareholders of failing companies write off losses. In 2018, the new tax law adds uncertainties, but shareholders and creditors knew that losses incurred in 2018 would face the new corporate tax rate of 21%, and so the government would only pick up 21% of the losses. Continue reading