Former President Donald J. Trump averted a financial disaster on Monday, reaching a deal that will spare him from paying a $454 million judgment in his civil fraud case while he appeals the penalty.
The lifeline came in the form of a bond that will prevent New York’s attorney general, who brought the lawsuit that led to the judgment, from collecting the $454 million until Mr. Trump’s appeal is resolved. The attorney general, Letitia James, accused Mr. Trump of fraudulently inflating his net worth by as much as $2 billion, and a judge ruled in her favor.
Mr. Trump secured the bond after an appeals court last week granted his request to lower the bond amount to $175 million, staving off a financial crisis for Mr. Trump. He otherwise would have had to post a bond for the full $454 million, which his lawyers declared a “practical impossibility.” Had he failed to do so, Ms. James could have frozen his bank accounts.
The clock had been ticking. When the appeals court ruled last week, it gave him 10 days to line up the bond, making Thursday the deadline.
The $175 million bond came from Knight Specialty Insurance Company, a California company that handles such deals. In providing the bond, which is a legal document, not an actual transfer of money, the firm essentially promised New York’s court system that it would cover the judgment against Mr. Trump if he loses his appeal and fails to pay.
Many details of the deal are private, but the former president most likely had to pay the company a fee and pledge cash and other liquid investments as collateral.
It was the collateral that prevented Mr. Trump from securing a bond for the full $454 million. Although Mr. Trump measures his net worth in the billions, much of that is drawn from the value of real estate, which bond companies typically don’t accept as collateral. While Mr. Trump had more than $350 million in cash and other liquid investments as of early this year, a New York Times analysis found, that was short of what he needed to secure the bigger bond.
His lawyers, after being spurned by more than 30 bond companies, recently cited “insurmountable difficulties” in obtaining the full bond.
Even to secure the $175 million bond, Mr. Trump probably had to dig deep into his reserves.
The terms may be costly, but Mr. Trump had little choice. Absent a bond, Ms. James could have moved to collect at any moment, freezing bank accounts and potentially starting the long, complicated process of seizing some of his marquee New York properties. She has suggested she would pursue Mr. Trump’s office tower in Lower Manhattan, at 40 Wall Street, a short walk from her office.
A spokeswoman for Ms. James, a Democrat, declined to comment.
A lawyer for Mr. Trump did not immediately respond to a request for comment.
Mr. Trump had recently posted a separate $91.6 million bond in a defamation case brought by the writer E. Jean Carroll. The collateral he pledged to the bond company in that case was off limits for the civil fraud bond. Few people, even wealthy ones like Mr. Trump, need to come up with bonds this big, let alone two at once, and it was unclear whether he would be able to secure both before time ran out.
Ms. James filed the lawsuit against Mr. Trump and his family business in 2022, accusing the former president of manipulating the value of his properties to obtain favorable loans from banks.
The judge overseeing the case — there was no jury — ruled in Ms. James’s favor and came down hard on Mr. Trump. The judge, Arthur F. Engoron, imposed a $355 million penalty, which climbed to $454 million with interest added.
The bond, for now, clears one major liability from Mr. Trump’s legal docket, but many more problems remain. Mr. Trump faces four criminal indictments in four different cities, the first of which is set to go to trial in two weeks in Manhattan.
In that case, Mr. Trump is accused of covering up a sex scandal during and after the 2016 presidential campaign.
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