What are the largest bankruptcies in US history? While running a company, the word “bankruptcy” is probably one of the scariest that might be heard in the office. However, there are cases when the bankruptcy of a company might affect not only the company and it’s employees, but can damage the entire economy of a country. Since the United States represent one of the strongest and largest economies in the world, the bankruptcy of some companies that took place at different periods in its modern history, brought serious problems, and some of them even had an impact on the global economy.
With this in mind, at Insider Monkey, we would like to present a list of 10 some of the biggest bankruptcies in the U.S. history. We took companies in order of their values as at the time before they filed for Chapter 11. The list comprises some of the largest corporations in the world, many of which didn’t manage to recover from the downfall.
The 12th place on our list of the largest bankruptcies is held by Texaco Inc which before filing for bankruptcy had $35 billion in assets. Texaco filed for bankruptcy in 1987 after a court decision according to which the company owned $10.5 billion to Pennzoil. Later, the oil retailer Texaco managed to pay Pennzoi $3 billion, and later managed to get out of the bankruptcy. In 2001, Texaco merged into Chevron Corporation (NYSE:CVX).
The 11th on our list is PG&E Corporation (NYSE:PCG), which also managed to climb out of bankruptcy, after filing for Chapter 11 in 2001. The largest utilities company in California, engaged in providing natural gas and electricity, had in assets $36 billion, before the filing. Due to natural causes, but also some changes of the regulation, the company filed for bankruptcy, which costed both PG&E and the state over $40 billion. PG&E emerged from bankruptcy in 2004.
Read on to see what other companies made our list and what value in assets had these companies before filing for bankruptcy.
No.10 Thornburg Mortgage
Thornburg Mortgage, a company specialized in offering mortgage loans, filed for bankruptcy in 2009, with assets before the filing worth $36.5 billion. The main cause of the collapse of Thornburg Mortgage is the decline in the house sales, which caused a depreciation of mortgages issued by the company.
Chrysler is one of the major U.S. car makers that was severely affected by the recent recession. Before filing for bankruptcy in 2009, the company had assets worth about $39 billion. With help from various bailouts, including U.S. government, Chrysler managed to get back on track. However, in 2011, Chrysler was purchase by the Italian car maker Fiat. With the impossibility of the U.S. government to recover the money it paid out for Chrysler’s bailout, the government lost about $1.3 billion because of the car maker’s bankruptcy.
No.8 MF Global
Brokerage MF Global has assets worth around $41 billion before filing for bankruptcy in 2011. The main cause of MF Global’s downfall is the European debt crisis, the company being one of the biggest enterprises affected by the bad debts of the European government.
Finance and insurance company, Conesco filed for Chapter 11 in 2002, having assets valued at 61 billion. Conesco managed to get out of the downfall a year later.
Enron aside from being one of the biggest collapses in the U.S. economy also was created one of the loudest scandals. The company filed for bankruptcy in 2001, after the emerge of the information according to which the company was guilty of accounting fraud. Before the filing the company’s assets were valued at $66 billion.
No.5 CIT Group
With assets worth about $80 billion, CIT Group filed for bankruptcy in 2009, being among other major U.S. banks that got hit by the credit crisis. The bank managed to recover only after being bailed out by the U.S. government under the Troubled Asset Relief Program.
No.4 General Motors Company (NYSE:GM)
Another car manufacturer that was hit by the financial crisis is General Motors. The company with assets worth about $90 billion filed for bankruptcy in 2009. The company managed to get back on track only because of a big bailout from the government.
WorldCom filed for bankruptcy in 2002, having assets worth around $104 billion. The telecommunications company before filing for bankruptcy was also caught in the middle of a scandal caused by accounting fraud, similar to another bankrupt giant, Enron.
No.2 Washington Mutual
The second and first positions on our list outran the previous companies in terms of assets value. As follows, Washington Mutual had assets worth almost $328 billion before filing for bankruptcy in 2008, as a result of mortgage crisis and recession, which caused the company’s stock to drop and led to a withdrawal of about $16.7 billion deposits.
No.1 Lehman Brothers
The famous bank Lehman Brothers will remain the biggest bankrupt company, having assets valued at around $640 billion before the filing. The company collapsed in 2008 as a consequence of the financial crisis, but also because of malfeasance. Lehman Brothers was constantly using some accounting tricks in order to cover the instability of its financial situation.