21 Biggest Bankruptcies in American History

In this article, we will be taking a look at the 21 biggest bankruptcies in American history. To skip our detailed analysis, you can go directly to see the 5 biggest bankruptcies in American history.

“Bankruptcy” is a term in fashion in 2023, and hasn’t been this popular in almost 15 years since the 2008 Great Recession which led to the folding of some huge companies. Had we written this article just a month ago, there would be two changes in this list, two bankruptcies which have resulted in a global crisis that we still don’t know the extent of. While bankruptcies are common not just in the U.S. but globally, as successfully running a business is a lot more difficult than TedTalks and motivational speakers would have you believe, major bankruptcies are generally quite uncommon. You can compare this list to our earlier work if you visit the 15 biggest companies that went bankrupt.

After the 2008 Great Recession which resulted in some of the biggest bankruptcies in American history as well as the folding of several smaller businesses, some of the biggest financial institutions in the U.S. were deemed systemically important or colloquially referred to as “too big to fail”, including most of the biggest banks in America by asset size.

While major banks in the U.S. haven’t seen a failure since the Great Recession, 2023 saw that scenario change completely, with Silicon Valley Bank collapsing in March. Silicon Valley Bank, like most major and minor financial institutions, had invested heavily in governmental bonds when interest rates were hovering near zero. However, when record inflation hit the globe including the U.S. in 2022, the Federal Reserve Board (Fed) responded by hiking interest rates consistently throughout the year, continuing into 2023. Because of this rise in interest rates, the face value of the bonds that SVB had invested in declined. Now, normally, that wouldn’t be an issue as if held to maturity, the decline in value would either likely recover or not be as significant, and any current losses would remain unrealized. Unfortunately, because SVB’s clientele largely comprised of tech startups whose cashflows aren’t as strong, when the cost of borrowing increased because of higher interest rates, these companies had to take out their deposits because of which SVB had to sell its bonds.

21 Biggest Bankruptcies in American History

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The biggest misstep though, came from SVB’s CEO announcing the company’s losses and the requirement to raise capital to the public, when the capital had not yet been raised, and wouldn’t generally have been considered to be a problem, but because of the public announcement, panic abounded and a bank run was made, resulting in around $42 billion being withdrawn in a single day, leaving the bank with a negative balance of $1 billion, and resulting in the California Department of Financial Protection and Innovations shutting down the bank. This was followed just a few days later by another huge lender in Signature Bank, thus sparking concerns of a wider banking crisis and resulting in financial institution shares plunging on 13th March. This led to the Biden administration stepping in to assuage concerns and promise to secure the deposits of all customers while simultaneously not bailing out the bank, which will cause huge losses to the company’s shareholders and creditors.

After the Federal Government promised to secure the banking deposits, shares rose but as concerns continued, the week commencing the 13th of March 2023 was a wildly uncertain one. One of the worst impacted banks is First Republic Bank (NYSE:FRC), which has lost over 80% of its share price in just the last one month. There have been fears that First Republic Bank (NYSE:FRC) is on the verge of collapse, which led to a consortium of major banks, including Bank of America Corporation (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM) and The Goldman Sachs Group, Inc. (NYSE:GS) coming up with a rescue package for First Republic Bank (NYSE:FRC) worth $30 billion, a move attempting to show their confidence in the banking industry. However, the share price of First Republic Bank (NYSE:FRC) still closed 33% down even after the deal.

The ramifications of the U.S. banking crisis go far beyond the country, considering the importance of its financial institutions to the global economy, which is why it was unsurprising to see European banks impacted heavily as well, none more so than Credit Suisse Group AG (NYSE:CS), the second-largest bank in Switzerland, whose share price fell by a third in just the last one month, resulting in $54 billion being offered by the Swiss National Bank as an emergency loan, and UBS Group AG (NYSE:UBS) acquiring Credit Suisse Group AG (NYSE:CS) on 19th March 2023, for over $2 billion.

While the long-term fallout of the current situation is uncertain, it may impact the probability of the U.S. avoiding a recession after Janet Yellen, the Secretary of Treasury in the U.S., said “That could turn this into a source of significant downside economic risk.” The Goldman Sachs Group, Inc. (NYSE:GS) has also said that the banking crisis increases the odds of a U.S. recession in 2023, saying that the change of the U.S. entering a recession is now 35% instead of 25% in the next one year.

Because of the uncertain situation right now, the biggest bankruptcies in American history may potentially change over the course of the next few months. For example, if First Republic Bank (NYSE:FRC) fails, its $212 billion in assets will make it one of the biggest bankruptcies in American history easily. While there have been some major bankruptcies in the cryptocurrency sphere after the collapse of FTX, one of the largest cryptocurrency exchanges in the world, followed by Celsius, their assets pale in comparison to the companies in our list. We have used our previous compilation of the largest bankruptcies in American history and updated them to include any major collapses which deserve to be in this list. For SVB, we have used its assets value from its website, while for Signature Bank, we used its asset value from Yahoo Finance. So now, let’s take a look at the largest collapses in U.S. history, starting with:

21. General Growth Properties, Inc.

Assets at time of bankruptcy (in millions): $27,392

General Growth Properties was a commercial real estate company which was the largest such company to declare bankruptcy in 2009, after missing a deadline to repay loans worth $900 million.

20. Bank of New England Corp

Assets at time of bankruptcy (in millions): $29,773

Based in Boston, Bank of New England was the 18th biggest bank in the country at its peak, but met its demise in 1991, one of the oldest in our list of the biggest bankruptcies in American history. Poor investments in the real estate market were one of the biggest contributors to the end of the company, and most of what’s left over of the company is now owned by Bank of America Corporation (NYSE:BAC).

19.  Global Crossing Ltd

Assets at time of bankruptcy (in millions): $30,185

Global Crossing was a major telecommunications company which had operations in more than 700 cities in 70 countries and was valued at $47 billion at the height of its success despite never being profitable, and became bankrupt in 2002.

18. IndyMac Bancorp

Assets at time of bankruptcy (in millions): $32,734

IndyMac Bancorp was a thrift and mortgage bank which filed for bankruptcy in 2008. At the time it was the fourth largest bank failure in U.S. history and its involvement in reverse mortgages and Alt-A mortgages being credited for both its rise and its fall.

17. Refco Inc.

Assets at time of bankruptcy (in millions): $33,333

Refco was a financial services company based in New York which collapsed in 2005. At the time of its collapse, the company had over 200,000 customer accounts but entered intro bankruptcy to obtain protection from its creditors.

16. Financial Corp. of America

Assets at time of bankruptcy (in millions): $33,864

Financial Corp. of America filed for bankruptcy in 1988 after being seized by the Federal Savings and Loan Insurance Corporation.

15. Texaco

Assets at time of bankruptcy (in millions): $34,940

Texaco was the largest bankruptcy in American history when it happened in 1987 and held the record for 14 years. The bankruptcy occurred after Pennzoil entered into a binding yet unsigned contract with Getty Oil and Texaco then signed a contract to buy Getty Oil. This resulted in Pennzoil earning a civil verdict of $10.5 billion which was the biggest civil settlement in U.S. history at the time.

14. Pacific Gas and Electric Company (NYSE:PCG)

Assets at time of bankruptcy (in millions): $36,152

Pacific Gas and Electric Company (NYSE:PCG) is a California-based utility company which filed for bankruptcy in 2019 after being held liable for the 2017 and 2018 wildfires in Northern California. Pacific Gas and Electric Company (NYSE:PCG) was able to exit bankruptcy in June 2020.

13. Thornburg Mortgage

Assets at time of bankruptcy (in millions): $36,521

Many of the biggest bankruptcies in American history took place in 2009, and Thornburg Mortgage, an REIT company, was no exception. Mortgage companies were one of the worst-impacted in the 2007-2010 financial crisis because of the subprime mortgage crisis.

12. Chrysler LLC

Assets at time of bankruptcy (in millions): $39,300

Owned by Stellantis N.V. (NYSE:STLA), Chrysler filed for bankruptcy in 2009 after which the company was completely reorganized. The bankruptcy resulted in the company defaulting in over $4 billion worth of debt, while the overall cost to taxpayers was $1.3 billion.

11. MF Global Holdings

Assets at time of bankruptcy (in millions): $40,541

MF Global Holdings was a global financial derivatives broker which became bankrupt in 2011. Because of liquidity issues faced by the company, it went bankrupt in 2011, mainly because of several repo agreements the company entered into which were off-balance sheet. In addition, a failure of a $6.3 billion bond investment in Eastern European bonds helped send the company over the edge.

10. Energy Future Holdings Corp

Assets at time of bankruptcy (in millions): $40,970

Energy Future Holdings is a Texas based utility company which filed for bankruptcy in 2014. Financial problems resulted in the company having to file for bankruptcy.

9. Conseco Inc.

Assets at time of bankruptcy (in millions): $61,392

Currently known as CNO Financial Group, Inc. (NYSE:CNO), Conseco filed for bankruptcy in 2002, mainly because of its acquisition of Green Tree Financial in 1998, just before the subprime bubble burst, with the $6.5 billion purchase proving to be a major issue for Conseco at the time, though it reemerged from bankruptcy in 2003.

8. Enron Corp

Assets at time of bankruptcy (in millions): $65,503

Enron is still currently considered as perhaps the biggest corporate scandal of all-time in the U.S. which resulted in the demise of one of the biggest accounting firms in the world as well after the collapse of Arthur Anderson. Enron was an energy company which used accounting deception to hide billions of dollars of debt and was the biggest bankruptcy in American history at the time, when it happened in 2001.

7. CIT Group

Assets at time of bankruptcy (in millions): $80,448

CIT Group is an American financial services company which filed for bankruptcy in 2009, and emerged on 10 December 2009 from bankruptcy protection.

6. General Motors Corporation

Assets at time of bankruptcy (in millions): $91,047

You might be surprised to see General Motors Corporation in our list of the biggest bankruptcies in American history, considering that General Motors Company (NYSE:GM) is one of the biggest car companies by sales. However, General Motors Corporation refers to the company to whom the liabilities were left while assets and subsidiaries were sold to General Motors Company (NYSE:GM) in 2009. The company received over $17 billion in bailouts from the Federal Government.

Click to continue reading and see the 5 biggest bankruptcies in American history.

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Disclosure: None. 21 biggest bankruptcies in American history is originally published at Insider Monkey.