Biggest Chapter 11 Filings in U.S History

MF Global filed for bankruptcy early this month. Its filing is the fifth largest financial industry public company bankruptcy by assets, after Lehman Brothers Holdings Inc., CIT Group Inc., Washington Mutual Inc., and Conseco Inc.. Its collapse was caused by overambitious expansion, criminal CEOs, and others. In the wake of MF Global’s bankruptcy, let’s look at other largest bankruptcies in the U.S history.

Pacific Gas & Electric Co filed for bankruptcy in 2001. This largest utility company fell victim to California’s electricity crisis of 2000-2001. However, after paying $ 10.2 billion to its hundreds of creditors, it emerged from bankruptcy three years later.

Value at bankruptcy: $ 36.15 billion

 

In 2009, Thornburg Mortgage announced that it would enter Chapter 11 bankruptcy as the housing crash credit crunch doomed the Santa Fe-based mortgage lender.

Value at bankruptcy: $ 36.5 billion

The recent financial crisis threatened Chrysler LLC so that in June 2009, the automaker emerged from a Chapter bankruptcy reorganization. The company was reorganized in alliance with Fiat.

Value at bankruptcy: $ 39.3 billion

MF Global was a primary dealer in US Treasury securities until 31 October 2011. The company filed for bankruptcy protection after its stock plunged 67%, quarterly losses hit record, and its European debt exposure was revealed. The global financial derivatives broker said that it had total assets of about $ 41 billion against liabilities of nearly $ 39.7 billion.

Value at bankruptcy: $ 41 billion (as of Sept. 30)

 

The Enron giant scandal which was revealed in October 2001, eventually led to the bankruptcy. The company was attributed as the biggest audit failure.

Value at bankruptcy: $ 65.5 billion

 

Hurt by declining sales for many years, General Motors was dealt a death blow by the financial crash. Last year, the company was re-listed on the New York Stock Exchange, with record value of $ 20.1 billion.

Value at bankruptcy: $ 91 billion

WorldCom filed for bankruptcy protection in 2002. The telecommunications heavyweight suffered from an accounting and executive malpractice scandal. Two years later, the company, with a new name MCI, emerged with around $ 5.7 billion in debt and $ 6 billion in cash. In 2005, MCI was acquired for $ 7.6 billion by Verizon Communications.

Value at bankruptcy: $ 103.9 billion

 

Due to dramatic losses in its stocks, massive exodus of most of its clients, and devaluation of its assets, the fourth largest investment bank in the U.S filed for bankruptcy protection.

Value at bankruptcy: $ 691 billion

 

In-Depth Look – 3rd Largest Bankruptcy – Bloomberg

 

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Economics is the study of our lives,our jobs, our homes, our families and the little decisions we face every day. Thus, I am keen on reading and studying economic issues.

Bankruptcy in the United States is governed under the United States Constitution (Article 1, Section 8, Clause 4) which authorizes Congress to enact “uniform Laws on the subject of Bankruptcies throughout the United States.” Congress has exercised this authority several times since 1801, most recently by adopting the Bankruptcy Reform Act of 1978, as amended, codified in Title 11 of the United States Code and commonly referred to as the “Bankruptcy Code” (“Code”). The Code has been amended several times since, with the most significant recent changes enacted in 2005 through the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Some law relevant to bankruptcy is found in other parts of the United States Code. For example, bankruptcy crimes are found in Title 18 of the United States Code (Crimes). Tax implications of bankruptcy are found in Title 26 of the United States Code (Internal Revenue Code), and the creation and jurisdiction of bankruptcy courts are found in Title 28 of the United States Code (Judiciary and Judicial procedure).

While bankruptcy cases are filed in United States Bankruptcy Court (units of the United States District Courts), and federal law governs procedure in bankruptcy cases, state laws are often applied when determining property rights. For example, law governing the validity of liens or rules protecting certain property from creditors (known as exemptions), may derive from state law or federal law. Because state law plays a major role in many bankruptcy cases, it is often unwise to generalize some bankruptcy issues across state lines.

In 2008, there were 1,117,771 bankruptcy filings in the United States courts. Of those, 744,424 were chapter 7 bankruptcies, while 362,762 were chapter 13.

Personal bankruptcies may be caused by a number of factors. In 2008, over 96% of all bankruptcy filings were non-business filings, and of those, approximately two-thirds were chapter 7 cases.

Although the individual causes of bankruptcy are complex and multifaceted, the majority of personal bankruptcies involve substantial medical bills. Personal bankruptcies are typically filed under Chapter 7 or Chapter 13. Personal Chapter 11 bankruptcies are relatively rare. The American Journal of Medicine says over 3 out of 5 personal bankruptcies are due to medical debt.

The largest bankruptcy in U.S. history occurred on September 15, 2008, when Lehman Brothers Holdings Inc. filed for Chapter 11 protection with more than USD9 billion in assets.[58]
The 20 largest corporate bankruptcies are as follows:[59]
Company Bankruptcy Date Total Assets Pre-Bankruptcy Description
Lehman Brothers Holdings, Inc. 9/15/2008 1,063,000,000 Investment Bank
Washington Mutual 9/26/2008 7,913,000,000 Savings & Loan Holding Co.
Worldcom, Inc. 7/21/2002 3,914,000,000 Telecommunications
General Motors 6/1/2009 ,290,000,000 Manufactures & Sells Cars
CIT Group 11/1/2009 ,000,000,000 Banking Holding Company
Enron Corp. 12/02/2001 ,503,000,000 Energy Trading, Natural Gas
Conseco, Inc. 12/17/2002 ,392,000,000 Financial Services Holding Co.
MF Global 11/08/2011 ,000,000,000 Financial Derivatives Broker
Chrysler 4/30/2009 ,300,000,000 Manufactures & Sells Cars
Thornburg Mortgage 5/01/2009 ,521,000,000 Residential Mortgage Lending Company
Pacific Gas and Electric Co. 4/06/2001 ,152,000,000 Electricity & Natural Gas
Texaco 4/12/1987 ,940,000,000 Petroleum & Petrochemicals
Financial Corp of America 9/09/1988 ,864,000,000 Financial Services & Savings and Loans
Refco 10/17/2005 ,333,000,000 Brokerage Services
IndyMac Bancorp 7/31/2008 ,734,000,000 Bank Holding Company
Global Crossing 1/28/2002 ,185,000,000 Global telecommunications Carrier
Bank of New England 1/07/1991 ,773,000,000 Interstate Bank Holding Company
General Growth Properties 4/16/2009 ,557,000,000 Real Estate Investment Company
Lyondell Chemical 1/06/2009 ,392,000,000 Global Manufacturer of Chemicals
Calpine 12/20/2005 ,216,000,000 Integrated Power Company

http://en.wikipedia.org/wiki/Bankruptcy_in_the_United_States