Bankruptcy can be caused by very many factors; for instance, lack of proper financial management is one of the main causes of corporate bankruptcies. This happens most often in situations where proper financial planning is not made. In other situations, bankruptcies occur when companies’ executives abuse their powers and use the companies’ resources for their own personal gains. Besides these two reasons, ill-advised and overambitious expansion may also lead to companies going under. In most cases, the parties involved tend to follow the NJ Bankruptcy Chapter 7 rather than Chapter 13 when these situations occur. The following paragraphs outline the five largest bankruptcy cases in the United States.
PG&E Company bankruptcy.
The PG&E Company is an example of a company that fell victim to bankruptcy. This took place between the year 2000 and 2001. PG&E was the biggest utility company in California, and they experienced blackouts due to the state’s energy crisis. The crisis got even worse when the power was cut out by Enron, which was involved in its own scandal and was responsible for manipulating the whole situation. As a result, PG&E suffered a major set-back during this period. Luckily, it was able to bounce back in April of 2004.
Jon Corzine Brokerage Company
On the 31st of October, 2011, the esteemed brokerage firm led by Jon Corzine declared bankruptcy in court. Before the bankruptcy, the value of the company was reported to be approximately 41 Billion dollars. The company was one of the biggest victims of the recent European debt crisis. Ever since the end of 2011, the company has not been able to recover.
In September of 2008, a verdict was reached in court, and the famous Lehman Brothers was declared bankrupt. In turn, the downfall of Lehman Brothers also knocked down the Washington Mutual. Regulators went ahead and seize the money when more than $16.7 Billion was withdrawn by customers of Lehman Brothers in less than ten days. Even though the government realized that a serious financial meltdown was happening, it declined to bail them out. Consequently, Lehman Company ended up being liquidated.
The WorldCom bankruptcy scandal
A good number of people were greatly surprised when they found out that WorldCom had been pronounced bankrupt. No one believed that the mistakes of the CEO were the causes that brought the entire company under. This scandal ultimately led to the arrest of WorldCom’s CEO, Bernie Ebbers. This took place in July of 2002. At that time, it was the biggest corporate fraud ever recorded in the history of the United States. The value of the company before bankruptcy was estimated to be $103.9 Billion dollars. After losing this much capital, the company was unable to get back on its feet. This is why WorldCom was renamed MCI in 2004. After it became MCI, it did not last very long before the company was sold to Verizon.
General Motors bankruptcy
Somewhere in June of 2009, General Motors suffered a devastating blow that almost took them out of business. Although the drastic drop in sales crippled the company, it was the financial crash that led to their downfall and bankruptcy. If it was not for the bail-out provided by the Obama administration, it would have spelled the end for one of the pillars of American manufacturing industry.
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