How Trump, suddenly strapped for cash, could raise more than half a billion dollars to satisfy judgments against him

New York (CNN) — Donald Trump is facing a cash crunch as deadlines are quickly approaching to find over half a billion dollars he owes in judgments.

On Wednesday, a New York appeals court judge refused to give the former president additional time to satisfy a $454 million judgment from a civil fraud case. A federal judge is poised to decide whether to grant Trump’s last-ditch legal effort to delay or post a fraction of an $83.3 million judgment he owes E. Jean Carroll from a defamation case.

The scramble over the past week reveals challenges Trump is facing in raising the combined judgments totaling $537 million. In pleading for relief, Trump’s lawyers told judges it could cost him an additional $104 million to post the bonds – their estimate of fees he would need to pay. Trump’s lawyers said he may have to dump some of his properties under “exigent circumstances” to raise cash quickly, tap the capital markets, or find another source of cash. Last month Trump began hawking $399 gold sneakers.

“It is a really substantial problem. He’s really between a rock and a hard place,” said Adam Kaufmann, a criminal defense lawyer.

The cash crunch challenges Trump’s long-projected image of a successful businessman with deep pockets and a maverick’s ability to outmaneuver legal and financial troubles. He rode that reputation to the White House in 2016.

Now, the leading Republican presidential candidate in 2024 could end up heavily indebted to a bank, donor, or some other source of capital. Adding to the uncertainty over Trump’s future earnings are the four criminal indictments he is facing.

On Thursday, lawyers for Carroll pointed to Trump’s growing legal issues when urging the judge to reject Trump’s request to delay or lower the amount of the bond in her case.

“If Trump is convicted of even a subset of the 91 felony charges lodged against him, the implications for his ability to satisfy the judgment here could be significant. And even prior to a conviction, Trump’s ‘brand’— purportedly his most valuable asset, though not one that can easily be utilized to satisfy a civil judgment — may suffer as a result of the various legal proceedings in which he is enmeshed,” Carroll’s lawyers wrote.

Trump’s reputation for not paying lawyers and others could impact his ability to raise cash. Trump can post the cash himself or get an appeals bond, which are often backed by cash, or easily tradable securities, but the size of the judgments complicates the process, underwriters say.

It’s unclear how much cash Trump has on hand. He testified under oath last year that he had more than $400 million in cash. According to the New York attorney general’s office, in 2021 Trump’s 30% stake in a partnership with Vornado, a real estate investment company, was worth about $200 million, but Trump would need to sell that stake to turn it into cash. It’s unlikely Trump would deplete his entire cash position since the properties have bills and payroll.

Trump offered to post a $100 million bond to cover the New York attorney general’s case, but the appeals court judge rejected it. The deadline for the judgment in the Carroll case is in less than two weeks unless that judge grants Trump’s request to delay or lower the payment. He has until the last week of the month to make good on the civil fraud judgment or face the possibility that the state may move to seize properties.

The sheer size of the judgments raises practical questions about how the Trump could feasibly come up with the cash. On Wednesday, the appeals court judge lifted one condition at Trump’s urging – a ban that prohibited him from taking out loans from financial institutions regulated in New York.

Big lenders

Many of the world’s biggest banks stopped lending to Trump decades ago. Deutsche Bank, which he turned to repeatedly to finance property deals, ended its relationship with Trump after January 6, 2021. Signature Bank, another past lender to Trump, also ceased doing business with him after the attack on the US Capitol.

Trump turned to Axos Bank, a California lender, in 2022 for a $100 million loan to refinance Trump Tower, but it isn’t clear whether that bank would lend to Trump again. CNN’s calls to the bank and its chief executive, Greg Garrabrants, were not returned.

Lawyers say Trump could try to take equity out of certain properties, but if there are outstanding mortgages or existing loans that could make it more difficult because a bank wouldn’t want to be second in line to collect money.

Another possible complication: The Trump Organization stopped preparing a personal financial statement for Trump two years ago, so a lender would need to become comfortable with the finances and could request an appraisal of properties, which also takes time.

Fire sale

Trump’s attorneys said without postponing the judgments Trump may have to sell some of his properties in what could amount to a fire sale.

“If he had to sell a property, it’s kind of a tough market, but even if it wasn’t, potential buyers would smell blood in the water and press for some pretty stringent terms,” Kaufmann said.

Trump has owned most of his properties for years so if he is forced to sell, he could incur a big tax bill unless he is able to offset it with losses.

“There are practical issues” to property sales, said Jeremy Saland, a criminal defense attorney.  “That’s a nightmare. How many properties is he going to have to come up with to do that?”

Any sale would have to be reviewed by the Trump Organization’s court-appointed monitor, retired judge Barbara Jones, who will remain in place for three years. Transfers above $5 million also must be reported to Jones.

Process of getting a bond

Another possible scenario is securing a bond. Appeal bonds make up only one percent of the bond business, according to the Surety & Fidelity Association of America. As uncommon as appeal bonds are, the need for an individual to secure such a massive bond is significantly less common.

“It’s harder for an individual than a company to secure a very large bond,” said David Shick, co-founder and president of ProSure Group, a broker that secures bonds.

Underwriters typically want cash or easy to sell assets to back the bond, but if they were to accept property it could become more costly. For example, the bond issuer might want, say, $200 million worth of assets as collateral for a $100 million bond to account for the time and effort needed to sell the property, if the client loses an appeal, he said.

Shick said for large judgments it’s possible several insurance carriers could pool together.

“It’s unusual but so is the bond size,” he said, adding, “the court will determine what they will and will not accept.”

In any situation where a company is deciding to back a large bond, especially if the collateral is illiquid like property, Shick said, “it comes down to it being a business decision on who you’re doing business with.”

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