The 10 largest U.S. bankruptcies

    From Lehman to Texaco, the mighty have fallen, taking down billions and billions with them.

    By Christopher Tkaczyk

    Lehman Brothers Holdings

    Rank: 1

    Date of bankruptcy filing: 09/15/08

    Assets: $691 billion

    One of the biggest calamities of the current recession is the fall of the once highly regarded (and onetime fourth-largest) Wall Street investment firm, which was forced to file for bankruptcy protection last September, the largest corporate filing in the history of U.S. bankruptcy court. As a result, the company's North American investment banking and trading businesses and New York City headquarters were sold to British bank Barclays. Some of Lehman's U.S. businesses, including wealth management firm Neuberger-Berman, continue to operate as stand-alone entities under new ownership. And because of the company's global reach, its bankruptcy proceedings are complex, ongoing, and have resulted in the closing of 80 of the bank's smaller subsidiaries.

    Washington Mutual

    Rank: 2

    Date of bankruptcy filing: 09/26/08

    Assets: $327.9 billion

    Amid fears of insolvency, customers of Washington Mutual withdrew more than $16 billion of deposits over a 10-day period last fall, causing a government regulator to seize the holding company's banking assets and sell them to JPMorgan Chase for $1.9 billion. The following day WaMu filed for bankruptcy protection. What was once the nation's largest savings and loan and sixth-largest bank is now a shadow of its former self. The holding company currently is suing the FDIC for improper seizure and is seeking $13 billion in damages.

    WorldCom

    Rank: 3

    Date of bankruptcy filing: 07/21/02

    Assets: $103.9 billion

    Once the second-largest long-distance telecom in the U.S. after AT&T, WorldCom filed for bankruptcy protection following the discovery of an $11 billion accounting scandal. In 2003 the company re-dubbed itself MCI, (the name of one of its previous acquisitions), and then emerged from bankruptcy a year later. In 2005 MCI was acquired by Verizon Communications for $7.6 billion and former CEO Bernie Ebbers was sentenced to 25 years in prison after being convicted of securities fraud, conspiracy, and filing false documents. He is serving his term at Oakdale federal prison in Louisiana.

    General Motors

    Prospective Rank: 4

    Likely date of bankruptcy filing: June 2009

    Assets: $91 billion

    If the automotive giant, which for many years was the largest U.S.company and reigning king of the Fortune 500, files for bankruptcy, it will be the largest industrial company (and fourth-largest overall) to seek bankruptcy protection in the history of American business. The likely outcome of the reorganization will be the emergence of a new version of the company that holds onto Chevy, Cadillac, Buick and GMC. The remaining, poor-performing brands Pontiac, Saturn, Hummer, Saab and Opel might be held by separate, spun-off companies, sold to foreign manufacturers, or simply closed down. As part of the bailout agreement, the U.S. government will own nearly 72.5% of the new company, with the United Auto Workers owning 17.5%.

    Enron

    Rank: 5

    Date of bankruptcy filing: 12/02/01

    Assets: $65.5 billion

    The collapse of a vast creative-accounting scandal destroyed the nation's largest energy, electricity and natural gas company in 2001. After a long and arduous case that was the most-watched bankruptcy proceeding in history, Enron emerged from bankruptcy protection three years later in 2004. Several of its top executives were later convicted of many counts of securities and accounting fraud. In addition to bringing down accounting firm Arthur Andersen, the Enron scandal is considered a landmark case because it inspired the Sarbanes-Oxley Act of 2002, which set new standards and practices for public companies. In 2007, Enron changed its name to Enron Creditors Recovery Corp. with the intention of liquidating the company's remaining assets.

    Conseco

    Rank: 6

    Date of bankruptcy filing: 12/17/02

    Assets: $61 billion

    After years of poor executive leadership, the insurance and finance company accrued massive debt of more than $8 billion and was forced to file for bankruptcy in December 2002. It reorganized and reduced debt to $1.4 billion, emerging in less than a year after selling its finance business. Conseco now sells life insurance and supplemental health insurance to more than 4 million customers.

    Because of a number of flaws in the settlement system, Conseco's restructuring resulted in an overhaul of the credit default swap market. Recently, Treasury Secretary Timothy Geithner has called for further regulation, saying that over-the-counter derivatives should be traded on exchanges and that dealers be subject to federal oversight.

    Chrysler

    Rank: 7

    Date of bankruptcy filing: 04/30/09

    Assets: $39 billion

    When President Obama forced Chrysler into bankruptcy protection in April, it was the largest manufacturer in history to file Chapter 11, while competitor GM also scrambled to meet government demands for a bailout. As a result of the reorganization, the carmaker is forming an alliance with Italian automaker Fiat. The United Auto Workers will take control of the company via its retirement plan and the U.S. government is expected to inject a total of $12 billion into the company. Most of its debt will be written down by the debt holders. Two years ago, Chrysler was sold to private equity firm Cerberus Capital Management following nearly a decade of ownership by German carmaker Daimler-Benz. In 1979, Chrysler narrowly avoided bankruptcy when the U.S. Government agreed to guarantee $1.5 billion in loans, which were paid back in 1983.

    Thornburg Mortgage

    Rank: 8

    Date of bankruptcy filing: 05/01/09

    Assets: $36.5 billion

    The Santa Fe-based real estate investment trust and "jumbo" mortgage lender was hit by the subprime mortgage crisis in 2007 as its stock dwindled and the credit markets convulsed. To prevent a collapse, the company ceased accepting loan applications while it tried to raise more equity through a stock offering. The following year it restated financials and creditors agreed to back off while the company raised more capital, but on April 1 of this year, Thornburg announced that it would close up shop and enter Chapter11 bankruptcy to sell any remaining assets.

    Pacific Gas and Electric Co.

    Rank: 9

    Date of bankruptcy filing: 04/06/01

    Assets: $36 billion

    The deregulation of energy markets in California that resulted in the blackout crises in 2000 and 2001 also saw the bailout of Southern California Edison and the bankruptcy of PG&E, the major supplier of energy to homes and businesses in Northern California. Because of limited generating capacity and the high cost of producing electricity, the company was forced into Chapter 11 protection in April 2001. California governor Gray Davis used the state's treasury to bail out the utility, provoking a controversy that eventually contributed to his ouster. PG&E emerged from bankruptcy in April 2004 after returning $10.2 billion to creditors. Today it provides natural gas and electricity to 15 million customers.

    Texaco

    Rank: 10

    Date of bankruptcy filing: 04/12/87

    Assets: $34.9 billion

    Texaco outbid Pennzoil in a merger battle over Getty Oil in 1984, disrupting an already completed deal. Pennzoil sued Texaco and was awarded $10 billion. The verdict was later reduced to $1 billion, but in 1987 a Supreme Court ruling later upheld the original finding, and because Texaco was unable to make payment to Pennzoil, it filed for bankruptcy protection. A series of shareholder lawsuits ensued, claiming a mishandling of the Getty merger. Texaco and Pennzoil later settled for $3 billion and the shareholder suits were thrown out of court. Texaco emerged from bankruptcy in 1988 and was acquired by Chevron in 2001 for $39 billion.