The Great Recession, triggered by the subprime mortgage market collapse and subsequent housing bubble burst, had a profound impact on the global economy. It led to a wave of bankruptcies, including several prominent companies in the United States. This article examines some of the largest bankruptcies during the Great Recession, their financial situations at the time of filing, and their current status.
Key Facts
- Lehman Brothers:
- Filing date: September 15, 2008
- Assets: $691.1 billion
- It was the largest corporate bankruptcy in U.S. history.
- Washington Mutual:
- Filing date: September 26, 2008
- Assets: $327.9 billion
- It was the largest bank failure in U.S. history.
- General Motors:
- Filing date: June 1, 2009 (although it faced significant financial difficulties in 2008)
- Assets: $91 billion
- It received government bailout loans and restructured, leaving its worst assets with “Old GM”.
- CIT Group:
- Filing date: November 1, 2009 (although it faced significant financial difficulties in 2008)
- Assets: $80.4 billion
- It underwent a prepackaged bankruptcy and continued restructuring efforts.
- Chrysler:
- Filing date: April 30, 2009 (although it faced significant financial difficulties in 2008)
- Assets: $39.3 billion
- It was pushed into bankruptcy by the Obama Administration and later partnered with Fiat for revival.
Lehman Brothers: A Collapse of Historic Proportions
Lehman Brothers, an investment bank with a long and storied history, filed for Chapter 11 bankruptcy on September 15, 2008. With assets worth $691.1 billion, it was the largest corporate bankruptcy in U.S. history. The collapse of Lehman Brothers sent shockwaves through the financial world and is widely regarded as a pivotal moment in the Great Recession.
Washington Mutual: The Largest Bank Failure in U.S. History
Washington Mutual, a savings and loan association, holds the dubious distinction of being the largest bank failure in U.S. history. It filed for bankruptcy on September 26, 2008, with assets totaling $327.9 billion. The Federal Deposit Insurance Corporation (FDIC) seized its deposits and sold its assets to JPMorgan Chase for a mere $1.9 billion.
General Motors: A Government-Aided Restructuring
General Motors, one of the “Big Three” American automakers, filed for bankruptcy on June 1, 2009, although it had been facing severe financial difficulties since 2008. With assets valued at $91 billion, GM underwent a government-backed restructuring. The Treasury Department provided bailout loans, and the company left its troubled assets with “Old GM.” It later returned to the public markets in November 2010, with the Treasury Department retaining a 32% stake.
CIT Group: A Prepackaged Bankruptcy for a Financial Services Giant
CIT Group, a financial holding company, filed for bankruptcy on November 1, 2009, after struggling with significant financial challenges in 2008. Its assets were valued at $80.4 billion. CIT underwent a prepackaged bankruptcy, which allowed it to continue operating while restructuring its debt. The company emerged from bankruptcy in 2010 and has been working to improve its financial position.
Chrysler: A Government-Orchestrated Revival
Chrysler, another American automaker, filed for bankruptcy on April 30, 2009, after facing financial difficulties in 2008. With assets worth $39.3 billion, Chrysler was pushed into bankruptcy by the Obama Administration. The government then enlisted Fiat and Sergio Marchionne to partner in the company’s revival efforts. The Treasury Department eventually sold its stake in Chrysler to Fiat at a loss in July 2011.
Conclusion
The Great Recession had a profound impact on the corporate landscape, leading to numerous bankruptcies, including several prominent companies. Lehman Brothers, Washington Mutual, General Motors, CIT Group, and Chrysler are just a few examples of the businesses that faced severe financial distress during this period. The bankruptcies of these companies had far-reaching consequences, affecting not only their employees and shareholders but also the broader economy.
Sources
- https://en.wikipedia.org/wiki/Category:Companies_that_filed_for_Chapter_11_bankruptcy_in_2008
- https://www.forbes.com/sites/steveschaefer/2011/08/10/the-great-recessions-biggest-bankruptcies-where-are-they-now/
- https://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_during_the_Great_Recession
FAQs
Which companies were the most notable bankruptcies during the Great Recession?
Some of the most notable bankruptcies in 2008 include Lehman Brothers, Washington Mutual, General Motors, CIT Group, and Chrysler.
What was the largest corporate bankruptcy in U.S. history?
Lehman Brothers holds the печальное distinction of being the largest corporate bankruptcy in U.S. history, with assets valued at $691.1 billion at the time of its filing.
What was the largest bank failure in U.S. history?
Washington Mutual was the largest bank failure in U.S. history, with assets totaling $327.9 billion when it filed for bankruptcy.
Did any automakers go bankrupt during the Great Recession?
Yes, two major American automakers, General Motors and Chrysler, filed for bankruptcy in 2009.
What happened to Lehman Brothers after its bankruptcy?
Lehman Brothers’ valuable assets were sold off, and its remains were liquidated by a trustee.
What happened to Washington Mutual after its bankruptcy?
The FDIC seized Washington Mutual’s deposits and sold its assets to JPMorgan Chase.
How did General Motors survive bankruptcy?
General Motors received government bailout loans and underwent a restructuring, leaving its troubled assets with “Old GM.”
What was the impact of the Great Recession on the corporate landscape?
The Great Recession led to numerous bankruptcies, including several prominent companies, which had far-reaching consequences for the economy and affected employees, shareholders, and various industries.