Donald Trump’s plan to foreclose on a failed North Charleston business co-founded by one of his sons was approved by a judge Monday while the presidential candidate was traveling to the area for a campaign rally.
The foreclosure plan is a complex real estate financing move that could potentially allow the senior Trump to profit from a $3.65 million loan that son Donald Trump Jr. and two other borrowers personally guaranteed to finance a building products company called Titan Atlas Manufacturing but did not repay.
Taxpayers are among the most likely losers in the deal, because the company’s unpaid state and federal taxes and other government payments totaling more than $96,000 can be recouped only if the winning foreclosure bid is high enough to cover nearly $5 million in secured debts that are first in line.
Charleston County has assessed the value of Titan’s 6.4-acre Pace Street property at about $3.3 million for tax purposes.
Trump bought the defaulted loan from Deutsche Bank in late 2014 for an undisclosed amount. Whether he makes any money on it will depend on how much the Titan building sells for at the foreclosure sale on Jan. 19. The warehouse is in Stark Industrial Park off Azalea Avenue.
Meanwhile, Donald Trump Jr. and the other remaining loan guarantor, Washington state farmer Lee Eickmeyer, appear to be off the hook for the debt. The third guarantor, Mount Pleasant businessman Jeremy Blackburn, sought bankruptcy protection in 2013.
Michael Beal, a Columbia lawyer representing the company the Republican candidate created for the deal, D B Pace Acquisition LLC, told Charleston County Master-In-Equity Judge Mikell Scarborough that D B Pace has agreed to not seek a “deficiency judgment” against the borrowers. That means that if bids at the foreclosure sale aren’t high enough to cover the note held by Trump’s company, the debtors won’t be pursued in court individually for the difference.
That was aimed at resolving counterclaims by Eickmeyer, who had personally loaned Titan $950,000. His unpaid loan to the company takes second position, behind the D B Pace debt, and could potentially be used by Eickmeyer in a bid for the property.
“We had extensive negotiations with Mr. Eickmeyer,” Beal told the judge at a hearing Monday.
Before those negotiations, Eickmeyer had alleged in court filings that D B Pace was engaging in unfair trade practices and purposefully caused Titan to default on the loan.
“We worked things out with Mr. Eickmeyer,” Beal said.
Eickmeyer’s lawyer, Brian Hellman, also said an agreement had been reached.
Aside from Eickmeyer, the Titan loan guarantors have moved on to other business deals in North Charleston. Donald Trump Jr. is a minority investor in a plan to redevelop the former Charleston Naval Hospital property, and Blackburn has been the local manager of that project. A company affiliated with Blackburn also attempted to build homes in North Charleston’s Joppa Way neighborhood, but instead defaulted on a $520,000 loan and left the neighborhood littered with partially finished houses.
Reach David Slade at 843-937-5552 or twitter.com/DSladeNews.