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10 Largest Bankruptcies

“Capitalism without bankruptcy is like Christianity without hell.”

– Frank Borman, former astronaut and CEO of Eastern Air Lines.


Former NASA astronaut Frank Borman sure knew what he was talking about, being brought down to earth by a workers strike at Eastern Air Lines where he was the CEO. The company eventually filed for bankruptcy. Over the years, there have been several companies that have sought the protection of Chapter 11 of the United States Bankruptcy Code. We present here a compilation of the top 10 largest bankruptcy filings in US corporate history based on the companies pre-bankruptcy assets.


Lehman Brothers – Filed on 15 September 2008 with $691 billion of assets. The biggest bankruptcy by quite a distance , the once-darling of Wall Street was done in by its overexposure to sub-prime mortgages and unwillingness of the government and other banks to save it. Restructuring continues with businesses sold off to Barclays and Nomura, and closing of 80 subsidiaries.


Washington Mutual – Filed on 26 September 2008 with $327.9 billion of assets. The following Wall Street casualty of the current economic downturn , WaMu as it was called by customers, the once-sixth largest US bank saw huge deposit withdrawals of $16 billion and was forced to sell away its assets to JPMorgan Chase.


WorldCom – Filed on 21 July 2002 with $103.9 billion of assets. Once second only to AT&T in its field, communications chief WorldComs executives began a $11 billion imaginative accounting disgrace when the industry entered a downturn in 2000. The trick was discovered in 2002 and the company forced to file for bankruptcy. Then CEO Bernard Ebbers is currently serving a 25-year jail term for securities fraud , conspiracy and false representation.


General Motors – Filed on 8 June 2009 with $91 billion of assets. The biggest of the Big 3 of American Auto at one time dominated the industry, with one of every two cars sold in the US being a GM product. After hardly missing bankruptcy owed to declining sales in 1991, it could not remain afloat in 2008. Facing one of the earliest challenges of his term, President Obama refused to bail out GM and the company opted for restructuring under Chapter 11.


CIT – Filed on 1 November 2009 with $71 billion of assets. The little business lender had enjoyed tremendous recent development fueled by elevated levels of debt. nevertheless , with Lehmans collapse, liquidity dried up and it was forced to take government handouts through the TARP program. When its request for another advance was refused, the bank turned to its bondholders for a $4.5 billion. Even this could not stave off bankruptcy.


Enron – Filed on 2 December 2001 with $65.5 billion of assets. From unpretentious beginnings, Enron grew speedily to become the nations largest energy, electricity and natural gas company, and the 7th largest overall. nevertheless , its development was fueled by false accounting practices which were discovered in 2001 and made Enron the byword for corporate failing and disgrace . The scandal also brought down accounting firm Arthur Andersen and led to the stringent Sarbanes-Oxley Act of 2002.


Conseco – Filed on 18 December 2002 with $61.4 billion of assets. once upon a time known as Security Life of Indiana, this insurance and finance company collapsed under a massive debt of $8 billion brought about by the ill-advised Green Tree acquisition for $6 billion. After undergoing restructuring under Chapter 11, Conesco now sells life insurance and supplemental health insurance.


Chrysler – Filed on 30 April 2009 with $39.3 billion of assets. The junior member of the Big 3 of American Auto could not meet market expectations for fuel-efficient vehicles and racked up massive debts which creditors refused to excuse or negotiate. Forced into bankruptcy, the automaker announced a 20% stake sale to Italian automobile giant Fiat.


Thornburg Mortgage – Filed on 1 May 2009 with $36.5 billion of assets. Another casualty of the current economic downturn , the Santa Fe-based real estate investment trust and mortgage lender took a enormous hit when a Deutsche Bank dealer downgraded Thornburg to “sell” on concerns of its sub-prime exposure. The company could not recover from the equity bereavement that followed and filed for bankruptcy.

Pacific Gas and Electric Co. – Filed on 6 April 2001 with $36.1 billion of assets. The California energy supplier hived off its gas plants from its hydroelectric plants after the deregulation of the electricity market. Because of the resultant restricted generating capacity and the elevated cost of producing electricity, the company was forced into Chapter 11 protection. The company emerged from bankruptcy in 2004 and now supplies natural gas and electricity to 15 million customers.

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