The 5 Largest Bankruptcies in US History
Every now and then it’s nice to look at our nation’s history from different angles, but I bet you didn’t think bankruptcy could ever be one of them. Corporations typically file for Chapter 11 business bankruptcy that allows them to “reorganize” their debts in order to more efficiently pay them off. If the reorganization plan is successful then the company can get out debt by selling off pieces of itself to competitors or smaller companies. Below are the 5 largest corporate bankruptcies in US history based upon how much the company was worth when they filed the bankruptcy paperwork with the courts.
1. Lehman Brothers
The current leader in the nations largest bankruptcy race is Lehman Brothers, a global financial services firm that filed Chapter 11 bankruptcy in 2008 despite having a value of $690 billion dollars. They were drastically affected by the sub prime crisis of 2008 and several former employees also blame sketchy business tactics for causing the eventual bankruptcy.
2. Washington Mutual
Also in 2008 the $330 billion dollar bank named Washington Mutual followed in the footsteps of Lehman Brothers and filed Chapter 11 bankruptcy. Before the case was filed many customers of the bank became nervous and began withdrawing all of their funds. The total withdrawal from worried customers totaled 16.7 billion dollars.
Several years earlier in 2002 the nation was shaken when its largest long distance phone company WorldCom filed for Chapter 11 bankruptcy. At the time of filing the company was valued at $103 billion dollars, but because of a scandal amongst those in upper management the CEO went to prison and the company went bankrupt.
The most recent bankruptcy on this list is the 2009 GM Bankruptcy when the failing automaker company was valued at $91 billion dollars. You may remember that to ensure the company didn’t shut down all of their factories for good they relied on a bailout from the US federal government. GM emerged from the bankruptcy in 2010 and is still fully operational today.
5. CIT Group
Another 2009 bankruptcy involved the commercial lender CIT Group worth at the time around $80 billion dollars. Only a month after filing their bankruptcy the CIT Group satisfied all of the courts requirements for the reorganization plan and began selling off parts of their company to satisfy its debts. Today CIT Group continues to improve and rebuild.
Filing bankruptcy affects individuals, families, small businesses and as you can see even the largest businesses in the country. Everyone struggles financially in different ways and in some cases they choose bankruptcy to deal with those struggles. The great thing about the bankruptcy laws is that they allow different types of bankruptcy for different people, organizations, debt limits, and other variables. Whether you are a single person struggling with $5-6 thousand dollars in credit card debt or a multi millionaire struggling with a failing business, going bankrupt may be one of the best decisions you ever make for your future.