Fallen corporate behemoths
2008
At least $639 billion in pre-filing assets
It's official: Lehman Brothers filed the largest bankruptcy case in history on Monday, Sept. 15, as the storied investment bank fell prey to the credit crisis. According to Bankruptcydata.com, Lehman's assets before filing for bankruptcy were six to seven times the pre-filing assets of the second largest bankruptcy since 1980.
2008
$327.9 billion in assets
In 2003, Washington Mutual Inc.'s then chairman and CEO Kerry Killinger outlined his company's goals by saying, "We hope to do to this industry what Wal-Mart did to theirs ... if we've done our job, five years from now you're not going to call us a bank." Killinger was right — but not in the way he intended.
Five years later, WaMu was crippled by the 2007-08 subprime-mortgage-loan crisis; within a year its stock price dropped from $30 a share to $2. In September 2008, worried customers withdrew $16.7 billion in deposits within a 10-day span, prompting the government to place the bank under control of the FDIC, which sold all its assets to JPMorgan Chase for $1.9 billion — making Washington Mutual the largest bank failure in history. The following day, Sept. 26, 2008, the bank filed for Chapter 11 bankruptcy and was delisted from the New York Stock Exchange. Unhappy with the details of its new ownership, WaMu sued JPMorgan Chase for access to $4 billion in deposits that it wants back; the case has not yet been settled.
2002
$104 billion in pre-filing assets
A month after an accounting scandal made headlines, the telecommunications company, once the second largest long-distance carrier in the U.S., filed for bankruptcy. Several WorldCom executives subsequently pleaded guilty to fraud charges, with CEO Bernard Ebbers sentenced to 25 years in prison. The company emerged from bankruptcy in 2004 as MCI Inc.
2009
$89 billion in pre-filing assets
By declaring bankruptcy on June 1, General Motors become the second of the Big Three automakers to file for Chapter 11 protection — joining Chrysler, which filed in April. With some $89 billion in assets, the GM bankruptcy is nearly double the size of Chrysler's; the company's restructuring will mark a seismic shift for GM. CEO Fritz Henderson warned that the filing may even — sacrilege! — push the automaker out of Detroit; if so, it would be another hard blow for an already struggling city.
The announcement came after the Obama Administration set a June 1 deadline for the beleaguered carmaker to make changes or file for bankruptcy as part of the terms of a nearly $19 billion government loan. GM cleared the last obstacle to bankruptcy on Saturday, May 30, when bondholders voted to exchange their debt for an ownership stake in a postbankruptcy GM. Obama Administration officials said the goal is to have the restructured company emerge from Chapter 11 protection in 60 to 90 days.
2001
$66 billion in pre-filing assets
The high-flying energy company made billions trading esoteric derivatives until insiders blew the whistle on Enron's massive accounting fraud — prompting a bankruptcy filing that rocked the U.S. financial world. The company was instantly devalued and thousands of employees were laid off, their pensions evaporated. Executives Kenneth Lay and Jeffrey Skilling were both convicted of fraud and other charges, although Lay died before being sentenced.
2002
$61 billion in pre-filing assets
Shares of Conseco, an Indiana-based finance and insurance company, once traded as high as $58, but they were worth less than $1 when the conglomerate declared bankruptcy. The company had racked up massive debt from multiple acquisitions and loans to officers to buy company stock. Conseco emerged from bankruptcy in 2003.
2009
$39.3 billion in assets
The 2008 recession took a severe toll on the U.S. auto industry, and of the Big Three manufacturers, Chrysler was the first to fall. Even a $4 billion government bailout wasn't enough to save the 84-year-old company, reeling from a 30% decline in auto sales in 2008. Chrysler filed for bankruptcy on April 30, 2009, and announced a partnership with Italian carmaker Fiat. Its coming reorganization (which includes another $8 billion from the government) will result in lower labor costs and less debt, but the company's sales are still down. In June 2009, Chrysler plans to close down 789 of its car dealerships — nearly 1 in 4.
2009
$36.5 billion in assets
Thornburg Mortgage declared bankruptcy after struggling to find investors to fund its core business: providing expensive mortgage loans to well-credited buyers. With home sales down dramatically and defaults on the rise, the value of the company's mortgages fell; after a $1.35 billion bailout from private investors failed to stop the collapse, the company was forced into Chapter 11 on May 1, 2009. Thornburg had previously estimated a loss of $2.75 billion during the first three quarters of 2008.
2001
$36 billion in pre-filing assets
California's largest publicly owned utility filed for bankruptcy after deregulation led the company to incur billions of dollars in debt from the rising cost of wholesale energy. Wholesale prices eventually dropped, and the day the company emerged from bankruptcy in 2004, its stock was worth three times as much as when it filed for protection
1987
$35 billion in pre-filing assets
The oil company filed for bankruptcy protection after a court said it owed Pennzoil $10.5 billion in damages stemming from an earlier merger agreement. Texaco eventually paid Pennzoil $3 billion, emerged from bankruptcy after 361 days and later became part of Chevron.
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