Friday, December 05, 2008
Floyd Norris gets us caught up with Donald Trump's latest effort to wiggle out of repaying $40 million to Deutsche Bank as part of his new Chicago hotel-condo development deal.
He points to a "force majeure" clause in the lending agreement that allows the borrower to delay completion of the building if construction is delayed by things like riots, floods or strikes. That clause has a catchall section covering "any other event or circumstance not within the reasonable control of the borrower," and Trump figures that lets him out, even though construction is continuing.It's hard to argue with that logic... Not the part about how an economic downturn should free people from their financial obligations - that really is laughable. The part about how condo buyers can't declare force majeure because they don't have a force majeure clause.
"Would you consider the biggest depression we have had in this country since 1929 to be such an event? I would," he asked in an interview, adding, "A depression is not within the control of the borrower."
He wants a state judge in New York to order the bank to delay efforts to collect the loan until "a reasonable time" after the financial crisis ends.
Deutsche Bank thinks the idea that an economic downturn should free people from the obligation to pay their debts is laughable.
Trump, it may be noted, does not want everyone to be treated in the same way. When I asked him if he would let remorseful buyers walk away from contracts to buy condominiums at pre-depression prices, he said he would not. "They don't have a force majeure clause," he explained.