Biggest bankruptcies of the past 35 years
When a company finds itself unable to pay its creditors, it may have no other alternative but to file for bankruptcy. This process is designed to help organizations pay off their debts under the supervision of a federal court.
Contrary to popular belief, filing for bankruptcy doesn't always spell financial ruin for a company. In fact, many successful corporations and brands have filed as a way to reorganize their assets and pay off outstanding debts. Marvel, Six Flags, and Texaco are just a few companies that have managed to bounce back after filing for bankruptcy. Still, reorganization under Chapter 11 is a dangerous gambit—studies estimate only 10% to 12% of businesses that file survive.
Considering that corporate bankruptcy filings are up 63% this year, Stacker looked at the 20 largest bankruptcy filings of American corporations between 1980 and 2015 to discover why companies went bankrupt and how many of their employees fared after the fact. For many of the companies on the list, large-scale crises like the housing bubble of 2007 or the economic recession of 2009 served as catalysts for ruin. Other companies failed due to human hubris, corrupt accounting practices, and mega miscalculations.
Read on for a history of the 20 biggest bankruptcies of the last three and a half decades.
#1. Lehman Brothers Holdings, Inc.
Total assets pre-bankruptcy: $691.1 billion
Bankruptcy date: Sept. 15, 2008
At the time of its collapse, Lehman Brothers was the fourth largest U.S. investment bank with 25,000 employees worldwide. A number of contributing factors led to its tumble including miscalculating the risks posed by rising home delinquencies after the housing boom of 2007. Former CEO Richard Fuld is now the chief executive at Matrix Private Capital Group. Former COO Herbert "Bart" McDade serves as the chairman of the Bond Market Association.
#2. Washington Mutual
Total assets pre-bankruptcy: $327.9 billion
Bankruptcy date: Sept. 26, 2008
Washington Mutual, a conservative savings and loan bank, became the largest failed bank in the history of the United States. Its demise was due to a number of factors including the housing crisis in 2007, rapid branch expansion, the collapse of the secondary market for mortgage-backed securities, and the fallout from Lehman Brothers' bankruptcy. Today, former CEO Kerry Killinger focuses his efforts on the Kerry and Linda Killinger Foundation.
#3. WorldCom, Inc.
Total assets pre-bankruptcy: $103.9 billion
Bankruptcy date: July 21, 2002
WorldCom, once the second largest long-distance carrier in the United States, filed bankruptcy due to $11 billion in accounting fraud. CEO Bernard Ebbers was sentenced to 25 years in prison for nine counts of conspiracy securities fraud and making false regulatory filings. The company rebranded in 2004 as MCI Inc.
#4. General Motors
Total assets pre-bankruptcy: $82.3 billion
Bankruptcy date: June 1, 2009
Automaker General Motors filed for bankruptcy after years of losses, declining market share, and a seismic drop in sales. Despite $19.4 billion in federal aid, the iconic automaker could not shift gears to avoid bankruptcy. The government poured another $30 billion into GM to fund operations during its reorganization. Former CEO Rick Wagoner is on the board of directors of ChargePoint and recently invested in a startup called YourMechanic.
#5. Pacific Gas & Electric
Total assets pre-bankruptcy: $71.4 billion
Bankruptcy date: Jan. 29, 2019
Pacific Gas & Electric (PG&E), one of the largest power providers the U.S., filed for voluntary Chapter 11 bankruptcy in a California court. The company provides most of the electricity and natural gas to millions of residents in Northern and Central California. The filing comes as PG&E faces extensive legal liabilities related to the recent deadly fires that devastated many parts of the state
#6. CIT Group
Total assets pre-bankruptcy: $71 billion
Bankruptcy date: Jan. 11, 2009
Commercial paper led to CIT's bankruptcy in 2009. The company provides key financing and advisory services to businesses in the retail industry. CIT serves as a rare example of a company that made good on bankruptcy proceedings—it paid off and refinanced debt, built assets, moved past regulatory restrictions, and recently rebranded. Former CEO Jeff Peek is vice chairman of Global Corporate and Investment Banking at Bank of America Corporation and serves as vice chairman of the New York City Ballet.
#7. Enron Corp.
Total assets pre-bankruptcy: $65.5 billion
Bankruptcy date: Dec. 2, 2001
Enron, once named “America's Most Innovative Company" by Fortune Magazine, crashed in 2001 thanks to CEO Jeffrey Skilling's creative market-to-market accounting that inflated income by around $586 million over a four-year period. Its stock—valued at a high of $90.56 in 2000—closed at just 26 cents a share when it filed bankruptcy. Skilling was sentenced to a 24-year prison term for his role in the scandal, but he was recently relocated to a halfway house. The documentary “The Smartest Guys in the Room" chronicled the full story of Enron's downfall.
#8. Conseco, Inc.
Total assets pre-bankruptcy: $61.4 billion
Bankruptcy date: Dec. 17, 2002
At the time it filed for Chapter 11, U.S. insurance and finance company Conseco, Inc. was the third largest bankruptcy in American history. Company founder Stephen Hilbert was removed after accumulating $8.2 billion in debt. Hilbert has spent over a decade in the biotech world and currently heads up corporate development for Oisin Biotechnologies. Today, Conseco is known as CNO Financial Group and positions itself as “middle America's valued security partner.”
#9. MF Global
Total assets pre-bankruptcy: $41 billion
Bankruptcy date: Aug. 11, 2011
After MF Global invested $6 billion in unpredictable European bonds and used over $1 billion of its customers funds to cover its losses, the commodity brokerage firm declared bankruptcy. Its ousted CEO Jon Corzine went on to become chief of Goldman Sachs and later served as senator and governor of New Jersey. His new hedge fund recently attracted almost $20 million in new money.
Total assets pre-bankruptcy: $39.3 billion
Bankruptcy date: April 30, 2009
Automaker Chrysler was on the brink of liquidation when the funds from the federal government and a partnership with Fiat allowed it to shift gears to survival. Ex-CEO Tom LaSorda founded and is the general managing partner of IncWell and the LaSorda Group. He also co-founded Stage 2 Innovations, a $100 million investment fund. He recently launched a mail-order bakery with his daughter.
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