How Donald Trump’s NY fraud ruling impacts his businesses

The bombshell court ruling finding Donald Trump liable for fraud left even his own lawyers scratching their heads — asking the judge on Wednesday to clarify his decision canceling the former president’s New York business licenses.

Manhattan Supreme Court Justice Arthur Engoron’s 34-page ruling from Tuesday would force Trump, 77, to hand over control of his Empire State properties — including Trump Tower in Midtown — to an independent third party, otherwise known as a receiver.

During the Wednesday hearing, Trump lawyer Christopher Kise asked Engoron: “Certain of the entities, physical entities like Trump Tower or 40 Wall St — is the court under the assumption that those assets would be sold or just to be managed under the moderator?”

“I’m not prepared to make a ruling,” Engoron replied.

In his ruling, the judge wrote the receiver must be appointed “to manage the dissolution of the cancelled” business certificates for Limited Liability Corporations, or LLCs, under the Trump Organization umbrella.

The decision was issued in New York Attorney General Letitia James’ sprawling civil fraud case against Trump, his namesake real estate company and executives including his children Donald Trump Jr. and Eric Trump — alleging that for years the ex-president exaggerated his assets to get an edge on loan and insurance terms.

Here’s how the ruling impacts Trump’s businesses, according to legal experts:

What are business certificates and what does it mean to have them revoked?

Business certificates are issued by the state to prove a company’s validity and are used for business transactions.

They can be thought of like a birth certificate is for a person, former financial-crimes prosecutor Diana Florence told The Post.

When the judge cancelled them, it was like being given “death certificates” — with the ruling amounting to a “corporate death penalty,” Florence said.

These certificates are required for entities like LLCs and come with privileges such as protecting personal assets if the company goes under, Cornell Law Professor Robert Hockett said.

Hockett said a common but “unsavory business practice” is for a company to pretend they have more money then they really do in order to help them get an LLC certificate.

In this case, an LLC functions like a “shell” meant to “evade accountability.”

“What the judge found yesterday is that Trump is effectively doing this,” Hockett told The Post. “He’s been pretending many of these businesses of his are well capitalized and capable of paying their creditors — in effect doing good work that benefits the public and warrants the certifications of limited liability.”

But Trump was found to have been abusing the privileges and now, “the chickens are coming home to roost,” Hockett said.

“We are going to see the name Trump coming off of a lot of buildings in New York,” Hockett predicted. “The Trumps will no longer be a real estate family in Manhattan.”

Will Trump appeal — and how would that affect the ruling?

Trump has already said he plans to appeal the ruling which, two lawyers said, is likely to stop the cancellation of the business certificates from taking effect immediately.

An appeal could be filed as early as this week, landing in New York’s mid-level appeals court called the Appellate Division, Hockett said.

Both Florence and veteran real estate lawyer Adam Leitman Bailey believe that will trigger a stay of Engoron’s ruling while the appeal plays out — which could take up to two years to decide.

The case could also work its way up to the Empire State’s highest court — or the New York Court of Appeals — potentially drawing the legal battle out for years, Florence said.

Leitman Bailey said that he believes Engoron’s decision was an overreach and that the appeal will be granted.

Still, there is a chance Engoron’s ruling would stand because “there is saying in law that bad facts make bad law, and in New York, there is no worse of a fact than Donald Trump,” Leitman Bailey said.

Will this stop Trump from doing business in New York?

If the ruling isn’t knocked down on appeal, it could stop Trump from being able to conduct business in New York, Florence said.

She explained that the Trump Org is like the skeleton and the skin of a person and the individual LLCs are like the organs in a body — with varying degrees of importance.

Some would be more like a appendix that one could easily live without, while others would be more like the heart, a vital organ.

“I don’t think the Trump Organization is going to cease to exist, it’s these vital LLCs that are going to cease to exist and that’s the real blow,” she said.

Leitman Bailey agreed that canceling the LLCs is a huge deal for Trump and his companies.

“By dissolving the LLCs, the property will be useless and he won’t be able to sell it,” Leitman Bailey said. “He would be in default on his loans, no buyer would be able to buy the property, no title insurance company would be able to insure it, and therefore no sale could take place.”

What will the receiver’s job be in the case?

Engoron gave both sides 30 days to propose a list of potential receivers to handle the dissolution of the Trump LLCs.

Florence likened the receiver to an executor of the estate of a deceased person, who wraps up that person’s affairs.

“The receiver is now going to manage the dissolution of paying the debts, liquidating property, — if there is a multi-million dollar fine — paying the judgment, making sure the taxes are paid,” Florence said.

The receiver wouldn’t be someone like a family member she said, but rather an independent person with no connection to either sides.

“It’s not going to be Ivanka,” Florence said. “It’s going to be someone that is independent, that is amendable to both parties in the case. They will be answerable to the court not to Donald Trump.”

Hockett compared a receiver to an administrator in a bankruptcy case.

“The receiver is going to manage these properties to prevent any losses,” Hockett said. “They ultimately want to salvage as much value as they can.

“How many creditors has Trump bilked? How many people were left holding an empty bag?” Hockett asked. “The receiver sorts out who is owed what. They try to liquidate the estate or various parts of the estate.”

Hockett said that given the extent of Trump’s alleged fraud he doubts there will be a “surplus” of funds left over at the end after all the debts are paid.

While Trump will still own the properties until the case is resolved, he won’t have control of them, but rather the receiver will.

With Post wires