This way Trump can raise US$500 million for his legal case

(CNN) — Donald Trump is facing a liquidity crisis as he has a fast-approaching deadline to settle more than $500 million in judgments.

On Wednesday, a New York appeals court judge denied the former president more time to satisfy a $454 million judgment in a civil fraud case. A federal judge is about to decide whether in a defamation case E. Whether or not to approve Trump’s latest legal effort to delay or vacate Jean Carroll’s $83.3 million judgment.

Last week’s fight highlights the challenges Trump faces in increasing the combined sentences by a total of $537 million. In seeking the relief, Trump’s lawyers told judges that posting bond could cost him an additional $104 million — an estimate of the fees he would have to pay. Trump’s lawyers said he may have to sell some of his properties “in an emergency” to raise cash quickly, tap the capital markets or find another source of cash. Last month, Trump began selling $399 gold sneakers.

“It’s a really significant problem. It’s really between a rock and a hard place,” said Adam Kaufman, criminal defense attorney.

The liquidity crisis challenges Trump’s long-held image of a successful businessman with deep pockets and a maverick’s ability to overcome legal and financial problems. He leveraged that reputation to reach the White House in 2016.

Now, the leading Republican presidential contender in 2024 could be in debt to a bank, donor or other source of capital. Adding to the uncertainty about Trump’s future earnings are four criminal charges he faces.

On Thursday, Carroll’s attorneys pointed to Trump’s growing legal troubles in urging the judge to deny Trump’s request to delay or reduce the bail amount in his case.

“If Trump is convicted of even a subset of the 91 criminal charges brought against him, the implications for his ability to serve a sentence here could be significant. And even before conviction, Trump’s ‘brand’ (supposedly his most valuable (assets, though not readily usable to satisfy civil judgments) suffer as a result of various legal proceedings in which he is involved,” they said. Carroll’s lawyers.

Trump’s reputation for not paying lawyers and others could hurt his ability to raise cash. Trump himself could post the cash or obtain an appeal bond, which is often backed by cash or easily marketable securities, but the size of the sentences complicates the process, lawyers say.

It is unclear how much cash Trump has on hand. Last year he testified under oath that he had more than $400 million in cash. According to the New York attorney general’s office, Trump’s 30% stake in a partnership with real estate investment company Vornado was worth about $200 million in 2021, but Trump would have to sell that stake to convert it into cash. Trump is unlikely to exhaust his entire cash position, as the assets include invoices and payrolls.

Trump offered to post $100 million in bail to cover the New York attorney general’s case, but an appeals court judge rejected it. A sentencing deadline in the Carroll case is less than two weeks away unless a judge grants Trump’s request to delay or reduce the payment. He has until the last week of the month to serve his sentence for civil fraud or face the possibility of state forfeiture proceedings.

The severity of the sentences raises practical questions about how Trump can get his hands on the cash. On Wednesday, an appeals court judge lifted a condition at Trump’s request: a ban that prevented him from receiving loans from regulated financial institutions in New York.

Big lenders

Many of the world’s major banks stopped lending to Trump decades ago. Deutsche Bank, which he repeatedly tapped to finance real estate deals, ended its relationship with Trump after January 6, 2021. Signature Bank, another former Trump lender, stopped doing business with him after the attack on the US Capitol.

Trump turned to Exos Bank, a California lender, in 2022 for a $100 million loan to refinance Trump Tower, but it’s unclear whether that bank will lend money to Trump again. CNN’s calls to the bank and its CEO, Greg Garabrants, were not returned.

Lawyers say Trump could try to take equity from some properties, but that could be more difficult if there are outstanding mortgages or existing loans because the bank doesn’t want to be second in line to collect the money.

Another potential complication: The Trump Organization stopped preparing personal financial statements for Trump two years ago, so lenders must be comfortable with the finances and can request property appraisals, which also take time.

Selling to vacate

Trump’s lawyers said that without the sentence being postponed, Trump may have to sell some of his properties that could amount to a liquidation sale.

“If you want to sell a property, it’s going to be a very tough market, but even if it’s not, potential buyers will smell blood in the water and push for very tight terms,” ​​Kaufman said.

Trump has owned most of his properties for years, so if he is forced to sell them, he could face a large tax bill unless he can offset them with losses.

Criminal defense attorney Jeremy Saland said there are “practical problems” in selling the property. “It’s a nightmare. How many properties do you have to offer to achieve that?”

Any sale would have to be reviewed by the Trump Organization’s court-appointed monitor, retired Judge Barbara Jones, who would serve for three years. Transfers over US$5 million must also be reported to Jones.

Bail Procedure

Another possible scenario is to acquire bonds. Appeal bonds represent only one percent of the surety business, according to the Surety and Fidelity Association of America. As rare as appeal bonds are, the need for an individual to obtain such a large bond is significantly less common.

“It’s harder for an individual than it is for a company to get a very large bond,” said David Schick, co-founder and president of ProSure Group, a bond securitization broker.

Underwriters typically want cash or easily salable assets to back the bonds, but it can be more expensive if they accept property. For example, a bond issuer may want $200 million in assets as collateral for a $100 million bond to cover the time and effort required to sell the property if the client loses an appeal, he said.

Schick said it’s possible for several insurers to band together for big decisions.

“It’s unusual, but so is the size of the bail,” he said, “the courts will decide what they will accept and what they won’t accept.”

In any situation where a company decides to back a large bond, especially if the collateral is intangible like property, Schick said, “it all comes down to the business judgment of who you’re doing business with.”