Kerplunk!

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Now that New York Attorney General Letitia James has asked the courts to issue a $250 million summary judgment against the Trump Organization, it suggests she has quite a strong hand. Even if she doesn’t get the summary judgment and she has to take it to trial, she’ll presumably win that fairly easily. This has led to a lot of speculation about what might happen to Donald Trump’s financial house of cards.

Donald Trump and the Trump Organization may have billions of dollars in assets, but that doesn’t amount to anything if the debts exceeds the assets. It’s like having a car you can’t get rid of because you owe more on it than it’s worth. As far as Trump’s liquid assets, he doesn’t appear to have any. Last week Trump had to use a bail bondsman (at a 10% penalty) just to come up with $200,000 in cash. That’s less than 0.1% of what Letitia James is seeking to take from him.

So if the courts agree to James’ $250 million fine, and Trump can’t write a check to cover it, what then? He’d have to sell off some of his assets. But what’s he going to sell? He appears to be upside down on most of his properties. Last year Trump sold off his claim to his Washington DC hotel – his most profitable and perhaps only profitable property – presumably to try to salvage the rest of the portfolio. But what’s he supposed to sell off now?

If Trump is so upside down on his other properties that he can’t raise $250 million cash by selling any of them, the courts could allow Letitia James to seize those properties accordingly, or even put it all into a receivership. How aggressive will the courts decide to be in letting James carve Trump up? That could come down to how egregiously guilty they conclude that he’s been with his fraudulent antics.

There’s also speculation that Trump’s business charter in New York could be revoked, which could give his tenants an opening to stop paying rent. They’d presumably then have to vacate the space. But if any of them have been wanting to get out from under their leases in Trump buildings in New York, this could be their opportunity to go into court and make it happen.

If you’re seeing a lot of words like “might” and “could” in this article, that’s pretty much the point I’m trying to make. If Letitia James gets the ruling against Trump that she’s seeking, it could set off a chain reaction of events that could be very impactful but also very unpredictable.

The best way to explain it is the old game Kerplunk. You have a bunch of support sticks holding up a batch of marbles, and you pull the sticks out one by one, trying to keep the marbles from falling. If you pull out any one stick, maybe some marbles will fall, maybe not. It’s hard to predict. But if you pull out twenty sticks at once, even if you can’t predict which marbles will fall or precisely how they’ll fall, you can be assured that a whole lot of marbles are going to fall. And that’s what’s about to happen to Trump’s financial house of cards.

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