The 10 Largest US Bankruptcies

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It’s a sad fact of the free market: sometimes companies, even very large ones thought to be impervious to the perils of the market, fail.

Some are subsumed into other businesses via buyouts, once market trading reduces a company’s value to a price favorable to other companies. Many, however, wind up filing for bankruptcy.

Here’s a look at the ten largest bankruptcies in United States history (based on bankruptcy filing amount):

1. Lehman Brothers

The bankruptcy of Lehman Brothers Holdings, once the fourth largest of Wall Street investment firms, is one of the great fiscal tragedies of our current economic slump.

The company filed for bankruptcy in September of 2008, the largest filing in any US bankruptcy court. This resulted in the sale of the firm’s US banking and trading businesses being sold to British bank Barclays. Other Lehman businesses now operate as stand-alone entities under US ownership, while 80 of them have closed.

2. Washington Mutual

When rumors of insolvency began, account holders at Washington Mutual withdrew $16 billion in deposits over ten days. Federal regulators stepped in and seized control, prompting an eventual sale to JP Morgan Chase for $1.9 billion.

3. Worldcom

Worldcom was once the second largest long-distance telecommunications company in the United States after AT&T. But in August of 2002, the company filed for bankruptcy protection after the discovery of an $11 billion dollar accounting scandal. The company emerged from bankruptcy using the name of one of its previous acquisitions, and was eventually acquired by Verizon Wireless for $7.6 billion.

4. General Motors

General Motors, once the largest company in the United States, was the largest industrial company to file for bankruptcy protection when it did so in June of 2009. As a result of that filing, the company is now majority owned by the United States government, via funds paid out under the Troubled Asset Relief Program.

5. CIT

New York based small business lender CIT was the fifth largest company to file for bankruptcy protection when it did so in November of 2009. The company simply could not recover when the Lehman Brothers failure dried up its available finance liquidity.

6. Enron

The accounting scandal that rocked Enron resulted in a $65.5 billion bankruptcy filing in December of 2001. Many of its top executives were convicted of fraud, but the company emerged from bankruptcy three years later. It also prompted the Sarbanes-Oxley Act, which set new standards for public companies.

7. Conseoo

The December 2002 bankruptcy filing of Conseoo was the seventh largest in history, with total assets of $61 billion. The company sold off its finance business, reduced its debt, and emerged as a seller of life insurance and supplemental health insurance.

8. Chrysler

Chrysler’s $39 billion bankruptcy filing in April 2009 was history’s eighth largest. At the time, it was the largest manufacturer ever to do so. After the restructure, much of the company is now owned by the United Autoworkers Union.

9. Thornburg Mortgage

Thornburg Mortgage, a Santa Fe based investment trust and mortgage lender was caught flat-footed by the 2007 sub-prime mortgage crisis. The company filed for the ninth largest bankruptcy filing in history when it filed with $36.5 billion in assets in May of 2009. The company announced in April that it would close up shop and sell any remaining assets via bankruptcy.

10. Pacific Gas and Electric Company

Pacific Gas and Electric Company comes in at the tail of our list with their bankruptcy filing with $36 billion in assets. High generating costs and limited capacity forced the company to fill in April 2001. The company emerged from bankruptcy after paying back $10.2 billion to creditors, and now provides 15 million people with energy.

Published or Updated: April 5, 2013
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

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