In the last few years we have seen the disappearance of many different businesses. For example, we’ll never get to go to another Blockbuster or eat a toasty Quiznos sub because nobody seems to be safe from America’s persistent financial crisis, especially big businesses. The reasons behind these big financial downfalls ranges from overambitious expansion tactics, to CEO’s that don’t like to follow the law, to a lot of bad circumstances heaped into one. Some of these companies were just “too big to fail” and managed to bounce back after disastrous events. Others, have most likely disappeared forever, stuck in the graveyard of businesses gone wrong. Whatever their reason for filing for bankruptcy, these big businesses were in more debt than most of us could ever dream of. So to remind us of all the businesses that we might never see again, here is a list of ten big time companies that have filed for bankruptcy.
10. Delta Airlines
Delta Airlines filed for bankruptcy in 2005, as a result of soaring fuel costs and low-fair competitors. The company, who was once the third biggest airline, was also hurt as a result of the 9/11 attack. Since the start of 2001, the company had lost about $6.1 billion dollars. According to experts, Delta Airlines waited too long to cut costs, unlike some of their competitors, leading them further into debt. However, less than four years after the company filed for bankruptcy, it was once again thriving.
9. Pacific Gas & Electric Co
PG&E filed for bankruptcy as a result of the Electricity Crisis of 2000-2001. When the blackouts swept through California, the cost of power and electricity skyrocketed. This was blamed in part by California’s decision to deregulate the energy industry in 1996. When the company finally bit the dust, their value at bankruptcy was $36.15 billion dollars. When PG&E filed for bankruptcy, they said they weren’t expecting any layoffs and that they fully expected to pay off their $9 billion in debt.
Chrysler’s real financial problems began in 2008, as a result of the automobile crisis. The car company tried to make-up for poor sales by letting employees go but they still fell further and further into debt. In November of 2008, it was published that Chrysler’s sales had fallen 34.8% in just 12 months. Chrysler and two other companies tried to get government assistance at this time but they were unsuccessful. In December 2009, President George W. Bush announced a $13.4 billion rescue loan for American automakers, Chrysler was included in this bunch in March 2009, and the White House said that it would provide an additional $6 billion dollars to help Chrysler through the automobile crisis. Just two years later, Chrysler was once again a profitable company.
When Conseco (an insurance and finance company) filed for bankruptcy in 2002, it had an estimated value of $52 billion. The company fell into bankruptcy for a couple of reasons, but the main reason behind its downfall is the companies that Conseco acquired in the 90s. For example, the purchase of Green Tree Financial was extremely damaging to Conseco in the long run. Conseco’s bankruptcy also marked the failure of two well-known chief executives: Steven Hilbert and Gary C. Wendt. Of the two, Steven Hilbert was paid $172 million building Conseco but in the end, he owed the company more than $160 million. Wendt was brought in to turn the company around. His services cost $75 million during the 27 months he was there. In 2003, Conseco managed to emerge from bankruptcy.
Enron is one of the most infamous cases of a scandal led bankruptcy. Enron was formed in 1985. Several years later, Jeffrey Skilling was hired. He provided a way to hide billions in debt through a few different methods. He used accounting loopholes, special purpose entities and additionally, poor financial reporting. In mid 2000, the companies stocks plummeted from $90.75 per share to less than $1 in November 2001. In 2001, Enron filed for bankruptcy with an estimated $63.4 billion in assets. As a result of the scandal, many of the executives at Enron were indicted for a variety of charges and some were sentenced to prison. Today, new regulations and legislation have been put into place to help stop something like this from happening again.
5. CIT Group
When CIT group, a United States financial holding company, declared bankruptcy, the value of the company was estimated at $80.4 billion. The CIT Group filed for bankruptcy on November 1, 2009, after a series of bad expansion plans. However, the company was bailed out just 38 days later by TARP. Today, CIT group seems to be doing well. According to Brendan Browne and Rian Pressman, CIT Group has “shifted towards a more bank-centric business model: It has repaid or refinanced a material portion of its high-cost debt, increased deposits, and moved many U.S originations to its commercial bank subsidiary, CIT Bank.”
4. General Motors
On June 1, 2009, General Motors filed for bankruptcy as a result of weak sales and the deadly financial crash. Until 2008, GM was the world’s biggest car-maker, so it came as quite a shock when the once powerful company filed for bankruptcy. At the time of its bankruptcy, the company was valued at $91 billion. The only thing that saved GM from complete destruction was a government bailout.
At one point in time, WorldCom was the Nation’s second largest long distance telecommunications company. That is until word got out about the scandals that were occurring behind closed doors. In 2001, the company announced that it had dramatized their earnings in 2001 and the first quarter of 2002, by a whopping $3.8 billion. The company was charged with accounting fraud and CEO, Bernie Ebbers, went to jail as a result of the scandal. Today, WorldCom has been renamed. It is now called MCI and has been purchased by Verizon.
2. Washington Mutual
When Washington Mutual filed for bankruptcy, it was worth a grand total of $327.9 billion. The bank was the second largest company (by asset size) to file for bankruptcy. In just 10 days, Washington Mutual customers withdrew $16.7 billion, causing regulators to seize the company. Eventually, JPMorgan bought WaMu, making the bank too big to fail.
1. Lehman Brothers
When Lehman Brothers filed for bankruptcy, it became one of the biggest Bankruptcy filing in U.S history. The company held over $600 billion in assets. The company faced a lot of loss because of the continuing sub-prime mortgage crisis. Eventually, the company was forced into bankruptcy. Through a now controversial decision, the government decided not to bail out the big time bank and the company was liquidated.