Wikinvest Wire

The Donald declares "force majeure"

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.

"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.
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.



Anonymous said...

Donald didn't learn the first time. Too much debt is a dangerous thing and can come back to haunt you.

Anonymous said...

Bloggers have seen the depression coming for years. I guess this proves that Donald is not as smart as many bloggers. (Most already knew this.)

Trump can only make money when real estate is sky rocketing. Look at his casinos, they have always been money losers.

Southern Quebec said...

Does this mean some activist judge will declare America officially in a Depression? Nice try Donald...

WV: reaps

ara1978 said...

I disagree with this posting. Donald was smart enough to put "get out of jail free card" in the contract, and the other side was dumb enough to sign it. If I asked my mortgage lender if I can have said clause, they'll laugh at me. Donald's lender said ok. I don't see what the problem here.

donna said...

Good grief, what a majeur ass.

Anonymous said...

ara, Financial hardship is not force majeure.

Aparna said...

Thanks for this great post.

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