1. Lehman Brothers Holdings Inc; $639 billion
The Lehman Brothers bankruptcy is without a doubt, the largest bankruptcy ever: the size is estimated between $613 billion and $639 billion!
The global financial-services firm, which did business in investment banking, equity and fixed-income sales, research and trading, investment management, private equity, and private banking declared itself bankrupt on September 15, 2008.
Why it collapsed?
The fourth-largest investment bank in the United States, and one of Wall Street's biggest dealers in fixed-interest trading, was heavily invested in securities linked to the US sub-prime mortgage market.
As the crisis in financial markets gathered momentum, it saw its share price collapse from $82 to less than $4.
2. WorldCom Inc; $103.91 billion
Founded in 1983 as LDDS Communications, WorldCom became America's second-largest long-distance company and the largest handler of Internet data. It is also the US's second largest bankruptcy ever at $103.91 billion!
Why it collapsed?
• The company was found guilty of underreporting 'line costs' (interconnection expenses with other telecommunication companies) by capitalizing these costs on the balance sheet rather than properly expensing them, and
• Inflating revenues with bogus accounting entries from 'corporate unallocated revenue accounts'.
3. Enron Corp; $63.39 billion
Fortune named it 'America's Most Innovative Company' for six consecutive years. It was on the Fortune's '100 Best Companies to Work for in America' list in 2000.
Enron Corporation, the Houston based energy giant was originally involved in transmitting and distributing electricity and gas throughout the United States. It remains US's third largest bankruptcy till date: $63.39 billion.
Why it collapsed?
It was discovered that many of Enron's recorded assets and profits were inflated, or even wholly fraudulent and nonexistent.
Debts and losses were put into entities formed 'offshore' that were not included in the firm's financial statements, and other sophisticated and arcane financial transactions between Enron and related companies were used to take unprofitable entities off the company's books.
4. Conseco Inc; $61.39 billion
From a small company set up in 1979, Conseco became one of the largest US home lenders and personal insurers by the late 1990s. Unfortunately, it collapsed under the weight of debts caused by it ambitious expansion and mounting bad loans. At $61.39 billion, Conseco filed for what is US's 4th largest bankruptcy petition.
5. Texaco Inc; $35.89 billion
Founded in 1901 in Beaumont, Texas by Joseph S Cullinan, Thomas J Donoghue, Walter Benona Sharp and Arnold Schlaet upon discovery of oil at Spindletop, Texaco began its journey as the Texas Fuel Company.
For many years, Texaco was the only company selling gasoline in all the 50 states of America.
On November 19, 1985 Pennzoil, another oil company, won a $10.53 billion verdict from Texaco. Over the latter's controversial acquisition of Getty Oil. It was the largest civil verdict in US history.
To obtain the billions required to pay the verdict, Texaco sold 50 per cent of its interests in marketing east of the Mississippi and Texas and its three Gulf Coast refineries to Saudi Aramco.
Texaco also withdrew from marketing gasoline in the Chicago area by selling its service stations and distribution facilities to Mobil in an exchange agreement.
On April 12, 1987, Texaco filed for bankruptcy, but continued to function under protection of US bankruptcy laws.
Texaco was an independent company until it merged into Chevron Corporation in 2001.
6. Financial Corp of America; $33.86 billion
7. Refco Inc; $33.33 billion
Founded in 1969 as Ray E Friedman and Co, Refco was a New York-based financial services company, primarily known as a broker of commodities and futures contracts.
Prior to its collapse, the firm had over $4 billion in approximately 200,000 customer accounts, and it was the largest broker on the Chicago Mercantile Exchange.
8. Global Crossing Ltd; $30.19 billion
Founded by Gary Winnick and three business associates in 1997 through Pacific Capital Group, Winnick's personal venture group, Global Crossing Limited is a telecommunications company that provides computer networking services worldwide.
9. Pacific Gas and Electric Co; $29.77 billion
Pacific Gas and Electric incorporated on October 10, 1905, was a consolidation of more than two dozen power and water concerns around the State of California.
With little generating capacity of its own, and unable to sell electricity to consumers for more than it could buy it on the open market, PG&E was forced to enter Chapter 11 bankruptcy on April 6, 2001.
10. UAL Corp; $25.2 billion
An economic downturn of global proportions, protracted labour negotiations, a proposed merger with US Airways and the tragedy of September 11, 2001, hit United hard.
For the year 2001, the company suffered a record loss of $2.1 billion. By mid-2002, United was asking employees to make wage concessions and asking the US government for a loan to help the company back to financial stability.
11. Delta Air Lines Inc; $21.8 billion
12. Adelphia Communications; $21.5 billion
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