Trump’s $540 million court fine tests his ‘King of Debt’ title

Donald Trump dubbed himself the “King of Debt” when boasting about how his business empire survived hard times, but a pair of big trial court losses this year are putting that moniker to the test.

The former president owes about $540 million from two recent verdicts, a number that exceeds even some of the biggest loans he’s taken out for his real estate empire. Trump is now a so-called judgment debtor, leaving him few options for avoiding or delaying those payments while he challenges them in court.

Numerous surety companies offering supersedeas bonds could work with Trump, and the collateral they get means the risk is generally low. While they prefer holding cash, they also accept what’s known as an irrevocable letter of credit, or ILOC, from a bank that would guarantee the bonds get paid if Trump loses his appeals. The banks would hold collateral that could include cash, real estate and other assets, while charging the debtor a fee of about 2%.

However, Trump’s relationship with banks has been somewhat fraught. Most offer ILOCs for a variety of reasons, and Trump may turn to lenders he’s worked with before, including Ladder Capital, Amboy Bank and Bryn Mawr Trust and Professional Bank, which has been acquired by Seacoast National Bank in South Florida. It’s unclear if all the lenders provide ILOC services, and terms of such agreements wouldn’t necessarily be made public.

If a debtor has additional legal troubles or a history of bankruptcies, that “can have an impact on such negotiations” and “make it much more difficult” to get a bond, said Zach Mefford, who co-founded ZipBond in 2021. “Every single surety bond is going to be underwritten on a case by case basis where the financial situation of that person is considered.”

One option for Trump to avoid a supersedeas bond is to post cash with the court instead. But the sheer size of the new judgments against him makes that route less likely.

Trump testified he had more than $400 million in cash, and the Bloomberg Billionaires Index recently estimated his total liquid assets, including cash, stand at about $600 million.