15 Largest Bankruptcies in American History

In this article, we will be taking a look at the 15 biggest bankruptcies in American history. To skip our detailed analysis, you can go directly to see the 5 Largest Bankruptcies in American History.

While companies are established to earn profits and reward owners and shareholders, in addition to customers and employees, not many companies are able to become profitable. Initially, when a company is newly established, it doesn't expect to become profitable for some time, often a few years. This is because higher capital investment is required at the initial stages, with costs being significantly high while having little revenue as a company attempts to establish itself and earn customers and a positive reputation. According to the U.S. Bureau of Labor Statistics, 20% of all new businesses fail in their first two years, 45% fail during the first five years and 65% of businesses fail in 10 years or more. Only 25% of businesses are successful beyond 15 years.

The Covid-19 pandemic really devastated many businesses, especially small ones. Hundreds of businesses folded as most states in the country went into lockdowns and businesses weren't able to operate as they would in normal circumstances. While the U.S. government did give PPP loans (paycheck protection programs) to business owners to allow them to pay their employees on time, many businesses still were unable to continue operating. The PPP program was worth $953 billion and the cost of the program was really high which led to criticism as estimates suggested that $169k - $258k were spent on every job saved, and many of the loans were then waived off, even for rich business owners. And to top it all off, more than a hundred such loans were made to businesses which didn't even have any name, while some loans were received by businesses owned by members of Congress.

Outside of the pandemic, once a business has been running for over a decade, odds of success are high. This is why major bankruptcies are rare nowadays unless there is a major recession as happened in 2008. Many major companies in the U.S. are actually deemed too big to fail because their collapse would be devastating to the economy of the country and hence, have to be supported by the government with bailouts in case of collapse. This was seen in the market crash of 2007-2008 where the government bailed out many major corporations including American International Group, Inc. (NYSE:AIG) which was given $180 billion by the government. While many people mention this statistic, few mention that American International Group, Inc. (NYSE:AIG) actually paid back $205 billion to the government in 2012. American International Group, Inc. (AIG) has since rebounded in a strong way and earned over $52 billion in revenue in 2021.


However, every once in a while, there is a major bankruptcy that reverberates through the industry. Nowadays, this is becoming alarmingly common in the unregulated industry that is the cryptocurrency industry. Through 2020 and most of 2021, Bitcoin and Ethereum, the two most valuable cryptocurrencies, went from high to high, followed by hundreds of other cryptocurrencies that made many early investors large fortunes. The consistent increase in value of cryptocurrencies led to more and more people investing their savings in the industry, which led to the establishment of several major cryptocurrency exchanges, including Binance and Coinbase Global, Inc. (NASDAQ:COIN). However, since the end of 2021, the cryptocurrency industry has been in a downward spiral which has resulted in many exchanges declaring bankruptcy. Many smaller cryptocurrency companies have collapsed earlier, such as Celsius, a cryptocurrency lender which has offices in four countries. In June 2022, while the company had around $12 billion in assets under management, the company paused all transfers as well as withdrawals because of extreme market conditions, before filing for bankruptcy in July 2022, with the prices of cryptocurrencies declining significantly after the news broke.

Photo by Ruben Sukatendel on Unsplash

However, the biggest bankruptcy came very recently, when FTX, a Bahamas-based cryptocurrency exchange, had to declare bankruptcy.

15. Refco Inc

Total assets of the company at the time of bankruptcy (in millions): $33,333

The New York-based financial services company became bankrupt in 2005, at a time when it was the biggest broker on the Chicago Mercantile Exchange, just two months after becoming a public company.

14. Financial Corp of America

Total assets of the company at the time of bankruptcy (in millions): $33,864

One of the earliest bankruptcies in our list, the Financial Corporation of America filed for bankruptcy in 1988.

13. Texaco, Inc

Total assets of the company at the time of bankruptcy (in millions): $34,940

After losing a case worth over $10 billion to Pennzoil after Texaco established a contract to buy Getty Oil despite Pennzoil already having an agreement for the same, Texaco filed for bankruptcy in 1987. This was the largest bankruptcy in U.S. history for 14 years.

12. PG&E Corporation (NYSE:PCG)

Total assets of the company at the time of bankruptcy (in millions): $36,152

PG&E Corporation (NYSE:PCG) is one of the biggest utility companies in the U.S. providing electricity and natural gas to more than 5 million households in California. PG&E Corporation (NYSE:PCG) was forced to enter bankruptcy after regulations prevented it from raising prices even though costs, due to multiple reasons, rose drastically. It was then rescued by the Californian government with the entire fiasco costing PG&E Corporation (NYSE:PCG) around $45 billion.

11. Thornburg Mortgage

Total assets of the company at the time of bankruptcy (in millions): $36,521

Most of the biggest bankruptcies in American history occurred due to the financial crisis from 2007 to 2009, and Thornburg Mortgage is part of this list, with the real estate investment trust becoming illiquid due to the subprime mortgage crisis.

10. Chrysler LLC

Total assets of the company at the time of bankruptcy (in millions): $39,300

A subsidiary of Stellantis N.V. (NYSE:STLA), Chrysler is considered to be among the biggest automakers in the U.S. Because of the financial crisis of 2007 - 2008, the company filed for bankruptcy in April 2009 with virtually all of the company's assets being transferred to Chrysler LLC to manage the debts while the government provided financing to the original company worth $8 billion.

9. MF Global Holdings Ltd

Total assets of the company at the time of bankruptcy (in millions): $40,541

The global derivates broker started being plagued by liquidity issues and fine and penalties in 2008, which eventually led to it declaring bankruptcy in 2011.

8. Energy Future Holdings Corp.

Total assets of the company at the time of bankruptcy (in millions): $40,970

The electric company was bought by multiple private equity firms in 2007, and due to gas prices falling instead of the expected increase, it filed for bankruptcy in 2014.

7. Conseco Inc.

Total assets of the company at the time of bankruptcy (in millions): $61,392

Conseco was the third biggest bankruptcy in U.S. history as of 2002. With debts piling for the company and its accounting practices coming into question Conseco filed for bankruptcy in December 2002.

6. Enron Corp.

Total assets of the company at the time of bankruptcy (in millions): $65,503

The Enron Corp scandal is one of the biggest scandals in American history, mainly due to the size of the corporation it ended up bringing down.


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Disclosure: None. 15 largest bankruptcies in American history is originally published at Insider Monkey.