Trump Filed Bankruptcy To Avoid Paying Workers. — Series: From A Layman’s Perspective

I saw this one recently from a family member, but I didn’t realize it was so pervasive in people's minds until I combed Twitter for some more perspective. Here is a small sampling of a search on “Trump screwed workers”. These results show how entrenched the idea is in the head of average people.

So I decided to explore this some more to see if I can determine where the truth about such claims land. I can to the inevitable conclusion that the situation is far more complicated than the simplicity implied by those with these claims. So let’s get into the meat of it:

Trump Filed Bankruptcy To Avoid Paying Workers.

Neither I nor Trump are a Corporate Bankruptcy Attorney. It’s quite the headache of a job ya know? Figuring out how to handle the financials of a failing business in a manner that satisfies the law and all parties involved. It’s a nightmare situation I wouldn’t wish on anybody, save those attorneys that address these issues. Well, I put my lack of interest in Bankruptcy laws on the back burner and consumed some of that dry dry law. Like taking out a giant Shredded Wheat bar and chewing it down without any drink. So after much gagging and coughing, I was able to put my head around the bankruptcy law enough to explore some of these claims from a layman’s perspective.

Trump’s history with bankruptcy contractors, subcontractors, and workers is a long storied one. Another one of those pesky gray areas where life likes to live. It’s a myriad of complex situations made up of multiple circumstances from multiple parties each with different complaints, resolutions, settlements, and views. The complexity of it all makes it near impossible to distill down to a moralistic binary imperative. Trump’s bankruptcy is good, bad, and ugly too. However, in order to get to the truth, we have to scrutinize these individual incidents and judge them each for context outside of the entire group. We cannot throw a multitude of claims of varying degrees, circumstances, culpability, and accusers into one group then judge them all with the conclusion you’ve drawn from the few cherry-picked ones that reinforces your confirmation biased conclusion. It’s a bad argument, but a great way to make soup.

The biggest problem with the argument is that the vast majority of contractors, subcontractors, and workers under Trump’s employ, over the span of multiple decades, are paid in full without issues and on time. This is something that gets left out when proponents of “bad Trump” jump into this quagmire. Compared to the normal experience with Trump, these anomalies are very few. I am not being dismissive of the families and very real people that were impacted by the bankruptcies. Their suffering is heartbreaking. We need to examine them each as individual cases instead of a group.

When working with thousands of people over hundreds of projects stretching back over several decades, there will inevitably be some problematic jobs, people, or circumstances that emerge which are not representative of the greater whole. That greater whole being that Trump is paying his employees on a regular basis. Each situation that alleges impropriety only makes up a minuscule fraction of the whole and has its own nuances and context that needs evaluation before laying judgment and conflating the few with the many to form a broad conclusion that does not represent all of the members of the group. For example, there are a number of unanswered questions surrounding each of these claims

  1. Was the plaintiff paid directly by Trump or a contractor?
    Cash flows downhill from the top:
    Trump -> Gen. Contractors -> Sub-contractors -> Workers
  2. Was the plaintiff paid at all?
  3. Did contractors accept renegotiation at a lower rate?
  4. Did they not get paid or was it just late due to courts?
  5. Did they complete their respective jobs on-time?
  6. Would you pay someone’s full rate for a bad or late job?
    Probably not if you had any good business sense.
  7. Was the quality of work satisfactory?
  8. Was the filing bankruptcy voluntary or mandatory?

I know, who wants to eat those pieces of dried Shredded Wheat? But I started chomping on the example cases being propped up as evidence of Trump’s malicious use of bankruptcy. I wanted to better understand how this may have affected Trump’s decision to file for bankruptcy and potentially leave workers unpaid.

In most of these situations, Trump was compelled to file bankruptcy by creditors petitioning for it. Trump requested Chapter 11 to restructure debt so he can keep the project afloat. Instead of Chapter 7 Liquidation. This gave Trump the freedom needed to work out new contracts with existing contractors. These contracts were settled for as low as .30 on the dollar and then paid out to that contractor. It’s up to the Contractor to make the settled price work. Unfortunately, this sometimes means the contractor will absorb all the money if they have not broken even on the project. A bad outcome for sure. However, this is a far better outcome than Chapter 7, which dissolves the company assets entirely and pays all debts with the funds in order of importance which is investors first and workers last. Not to mention, filing Chapter 7 would have removed the Jobs of the existing employees as well, harming far more workers. So now we can see that we are the weeds here and it’s not as clearly a black/white issue. So let’s consider your own ethics with these questions.

Let's assume we are Trump’s scenario ourselves. Your Casino is about to topple amidst ongoing construction to modernize and compete. Then your creditors want to call-in your debts because they’ve lost faith in the value of the Casino. They file suit to force bankruptcy. At this point what would you do:

  1. Would you file for Chapter 7, or 11?
    Chapter 11 would be the smart move since chapter 7 would dissolve the entire project.
  2. Would you address the bankruptcy directly, via lawyers, or a court-appointed 3rd-party trustee?
  3. Would you renegotiate outstanding contract prices with contractors?
    Since this is the point of Chapter 11, I’d call this smart business sense.

You don’t have to take my word for it though, even “The Hill”, which is another “unbiased” news source has to qualify their statements by inserting “in full” or “on-time” to make sure their statement is not liable and factually accurate. Example:

“records show that Trump failed to pay at least 253 subcontractors in full or on time.”

This context paints a different picture over the article’s headline, doesn’t it?

“Report: Trump has refused to pay hundreds of workers”
https://thehill.com/node/282933

So we need to keep these facts in mind while assessing the stories that Trump has not paid workers, and to address the common flaws in their assertions.

  • A bankruptcy on its own is not evidence of malfeasance.
  • A bankruptcy on its own is not evidence of workers going unpaid.
  • A bankruptcy on its own is not evidence of business sense.

Detractors insinuate that it was Trump’s plan all along to push his companies into bankruptcy and trigger the creditor to call in their debts so he could file and “screw over the workers” like an evil overlord. But the laymen that we are have little understanding of what actually happened during these events and less understanding or bankruptcy, especially when it is a corporate bankruptcy that is distinctly different than personal bankruptcy, which Trump has never filed.

I find the outrage unwarranted. Trump is not the only company to use bankruptcy as a tool to weather the storms of finances that make up his portfolio. There is no outcry over these others like Hostess who filed for bankruptcy yet we still see those yummy treats on the shelves and blissfully devour that sweet yummy goodness without pondering the moral implications of who got shafted by the financial situation of the company and its contractors at the time.

Look, I’m not praising Trump for this behavior, merely pointing out the hypocrisy. When it comes to money, Trump has made decisions based on his bottom-line, as all businesses do, sometimes that hurts workers. That’s not an uncommon practice for large companies or even small companies. How many people do you know work at a large company who feel that the company’s pencil pushers have the workers’ best interest in mind? I know of none. I can admit that I am not a bankruptcy lawyer and nor would I want to be one. But what minor digging around I did shows it’s not a problem unique to Trump and it’s not representative of his successes versus his failures. See the quote below from Stimmel-law that shows the pervasiveness of bankruptcy in the Construction Business:

“Construction is a high-risk business and anyone who has engaged in it for long has encountered the problem of one or more of the various parties engaged in a project either disappearing from the project or filing bankruptcy in the midst of the job.”

Bankruptcy and Construction Contracts — What To Do
https://www.stimmel-law.com/en/node/558

Hell, even Snopes refuses to true/false fact check this quagmire of gray business ethics and they take every opportunity they can to jab at the president or the right. Including leaving out his list of successes but listing off his failures.

Donald Trump’s Bankruptcies — https://www.snopes.com/?p=43758

This all boils down to my overarching problem that people are continuously manipulated by the media’s bias of Trump and the Right. They lie, mislead, and redirect, and because they are so prevalent across multiple sources that people believe the lies after reading it from many different sources all with the same bullet points that make Trump, or whoever their target is look bad.

“A lie told often enough becomes the truth.”
― Vladimir Lenin

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