Lehman Brothers Was The Largest Bankruptcy in History
You may think that General Motors was the largest bankruptcy in history, but that's not the case.
In actuality, General Motors (as of the time that this article was written) was actually the fourth largest bankruptcy in history, based on the total amount of assets that it held pre-bankruptcy.
GM "feels" like a really big bankruptcy (and it is) due to the noticeable impact of the situation on everyday Americans. Cars are being marked down. Friends and neighbors are losing their jobs. Factories are closing down. Dealerships are being shuttered.
There is no doubt that the General Motors bankruptcy will have a lasting impact on the lives of many Americans.
However, as mentioned, General Motors is technically only the fourth largest bankruptcy in history.
The obvious question becomes - which company holds the dubious distinction of having the largest bankruptcy of all time?
In order to answer that question, let's step backwards from #3 to #1.
3. Worldcom, Inc. ($103 billion dollars) When Worldcom filed for bankruptcy in July of 2002, the company had just over $103 billion dollars in total assets. This was about $20 billion dollars more than General Motors, which managed to secure the fourth spot on the list.
Worldcom became mired in an accounting scandal from which it was never able to recover. Company officials were using fraudulent accounting methods to "mask its declining earnings". $3.8 billion dollars of fraud was unearthed at the company, and Worldcom found itself filing for bankruptcy shortly thereafter.
2. Washington Mutual ($328 billion dollars). Washington Mutual filed for bankruptcy on September 26th, 2008.
Washington Mutual succumbed to heavy subprime loan losses and an eventual "run on the bank".
The company was eventually seized by the FDIC and declared bankruptcy a short time later.
1. Lehman Brothers ($639 billion dollars). The largest (by far) of all of the biggest bankruptcies up until this point was Lehman Brothers, which filed for bankruptcy in September of 2008.
Prior to their bankruptcy filing, Lehman Brothers had approximately $639 billion dollars in total assets.
The bankruptcy of Lehman Brothers, which was founded in 1850, is thought by many to be the single most important event that tipped the world into a full-scale economic meltdown.
The bankruptcy and subsequent liquidation of Lehman Brothers helped spawn the $700 billion dollar TARP (Troubled Asset Relief Program), which has become the subject of such scorn.
Are the days of massive bankruptcies behind us for the time being?
Or is there another monster lurking around the corner?
Filed under: General Knowledge