11 Largest Bankruptcies of All Time

PG&E Corp. (NYSE: PCG) is the name of both a holding company and the utility owned by that company the supplies electricity and natural gas to northern California homes and businesses. The company was pummeled by rising costs of electricity in the summer of 2001, caused in part by price manipulation in the market. The state bailed the company out but it cost Governor Gray Davis his job and led to Arnold Schwarzenegger’s election to the post.

Thornburg Mortgage was an early victim of the collapse in housing prices. It was forced to restate its fiscal 2007 results and in 2008 could not raise enough cash to meet margin calls totaling some $610 million. Thornburg never recovered after several creditors demand payments totaling nearly $950 million in March of 2008.

The U.S. government took over ownership of Chrysler and GM in March 2009 in exchange for bailout funds to keep the two automakers open following the debacle known as the financial crisis. The feds eventually forced Chrysler to accept a merger offer from Italy’s Fiat. In all, Chrysler received $12.5 billion in federal bailouts and repaid $11.2 billion of it.

MF Global Holdings was the global commodities trader run by former New Jersey Governor and U.S. Senator Jon Corzine. The firm got tangled up in currency trades that spooked its customers, leading to withdrawals and a cash shortage due to over-exposure to “repo” transactions, sales of securities at a given price with an agreement to buy them back at a later date for a higher price.

Conseco was an insurance and finance company at the time of its filing and was able to negotiate a deal with its bondholders that made them the owners of the surviving company for about $1.9 billion in equity. Policyholders did not lose any cash, but holders of common stock received nothing.

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The poster child for accounting fraud in the United States. Enron’s price manipulation was instrumental in the PG&E bankruptcy of 2001, and it was this company’s criminal behavior that led to the tightening of reporting requirements for U.S. corporations under the Sarbanes-Oxley Act of 2002. Four company officials were convicted of conspiracy, fraud and insider trading, including the chief executive officer, the chief operating officer, the chief financial officer and the CEO of one of the company’s divisions. The collapse of Enron also brought down its accounting firm, Arthur Anderson.

The financial services firm offers both commercial and consumer banking that got caught in the subprime mortgage lending fiasco. It quickly became a bank holding company and received some $2.3 billion in federal bailout funding. CIT exited bankruptcy just over a month after it first filed for protection.

General Motors Corp. (NYSE: GM) is the largest U.S. industrial corporation ever to file for bankruptcy protection. The company received a federal bailout $68.2 billion in 2009 ($51 billion for the automaker and the remainder for its GM financing arm). After all the arithmetic was finished, the bailouts of GM ended up costing U.S. taxpayers some $8.9 billion.

At one time, Worldcom was the second-largest telecom provider in the United States. In 2000, however, then-CEO Bernard Ebbers ran into some difficulty when presented with a margin call on his personal investments. One thing led to another, Ebbers was replaced and an accounting scandal eventually led to Worldcom’s demise.

Washington Mutual was a savings bank and savings and loan association until a 10-day bank run saw depositors withdraw more than $16 billion in June of 2008. That forced the federal government to put the bank in receivership, which resulted in JPMorgan’s purchase of most of the bank’s branches. The savings bank was founded in 1889.

The first — and largest — of bank failures, the once-mighty investment bank invested heavily in subprime mortgages, and when the value of those assets went to zero, Lehman had no choice but to close the 158-year old bank. Bits and pieces of the company remain among other financial firms like Barclays and Nomura Securities. The bank’s failure was the subject of a book and movie both titled “Too Big to Fail.”