Over the weekend, news reports suggested that Donald Trump's casino group was going to file for Chapter 11 bankruptcy protection, and that's exactly what happened yesterday. Casinos in both Atlantic City and Las Vegas are feeling the pinch of our struggling economy, and this is probably one of several bankruptcies that will result.

Trump didn't want to file bankruptcy. He wanted to buy out shareholders and bondholders, taking the company private to avoid bankruptcy. When the board disagreed, Trump resigned from the board.

Trump's casino group reported assets of $2.1 billion and debts of $1.74 billion. The company missed its December payment of over $53 million to bondholders. Although there are more assets than liabilities, the company likely needs cash to satisfy debts that need to be paid now. The buildings and other hard assets don't really help when cash is what's needed. Chapter 11 bankruptcy basically holds off the creditors for a while, giving the company time to negotiate better terms on the debt and hopefully eventually pay a large portion of what is owed.
Trump Entertainment has filed bankruptcy twice in the past, with the most recent filing in 2005. Maybe the third time is the charm for the casino group. So how does Trump remain wealthy when he seems to be involved in bankruptcies on a regular basis? His ownership stake in the casino business is only a small part of his personal portfolio, and his lawyers make sure that he's personally insulated from damage that could be caused by a failing business. (Yes, it's all legal, and a part of good financial and legal planning.)

It's unlikely that Trump's image or empire will suffer as a result of this bankruptcy. He's doing so many different things, and has so many people convinced that the name Trump equals success, that he'll likely carry on with business as usual, making money hand over fist.

Forensic accountant Tracy Coenen investigates corporate fraud and consumer scams, and is the author of Expert Fraud Investigation and Essentials of Corporate Fraud.