On December 2, 2001, Enron filed for bankruptcy after a scandal that involved hiding billions in assets through failed projects and deals. Here are 6 of the most high-profile and shocking bankruptcies in American history...
Lehman Brothers Lehman Brothers, an investment bank with assets of $691.06 billion, was heavily involved in subprime mortgages, and it declared Chapter 11 bankruptcy on September 15, 2008. Its assets dropped like a rock when the housing bubble burst; many people lost their homes when the real estate market collapsed. Lehman’s had been in business for 158 years, but only a small part of the company survived the bankruptcy.
Washington Mutual Washington Mutual, the largest savings and loan bank in the country, filed for bankruptcy on September 26, 2008, under Chapter 11. The cause was a bank run that lasted for 10 days when depositors withdrew over $16 billion in June of that year. The bank, founded in 1889, went into receivership, and most of its branches were purchased by JPMorgan.
WorldCom The July 21, 2002 filing for bankruptcy by WorldCom, one of the biggest U.S. telecom providers, was the result of the biggest scandals in accounting in the country. The company had tried to hide the fact that it was failing by exaggerating its cash flow and net income. Its former CEO, the 10-gallon hat, cowboy boot-wearing Bernie Ebbers, ended up being sentenced to 25 years in prison as a result.
General Motors General Motors received $19.4 billion from the federal government, but that didn’t keep the company from filing for bankruptcy on June 1, 2009, in New York. During its bankruptcy reorganization, the feds handed over another $30 billion to save the company. A few years later, GM was out of the red and into the black and had repaid its government debt, but the bailouts cost U.S. taxpayers around $8.9 billion.
CIT Group CIT Group, which provided loans to small and mid-sized businesses, filed for Chapter 11 bankruptcy to reorganize itself on November 1, 2009, after its loans were hit hard by the recession. According to the bankruptcy filing, the company held assets of $71 billion but had liabilities of $64.9 billion. After the company took $2 billion in funds through TARP and its shareholders lost everything, the company recovered.
Enron Enron was the perfect example of accounting fraud, and its illegal price manipulation even brought down the energy company PG&E in 2001. Chapter 11 was filed by Enron on December 2, 2001, and four officials with the company were convicted of insider trading, conspiracy, and fraud, including the CEO. Shares in the company went from $90.75 to a rock bottom price of $0.26 because of the company's cooked accounting books and fake holdings.