10 Famous U.S. Bankruptcies


twinkiesIn November 2012, the 82-year-old Hostess Brands Inc. company sought permission to start closing its business. However, investment firms Metropoulos & Co. and Apollo Global Management purchased Twinkies and Hostess' other snacks for $410 million in March of 2013.

Now the demand for Hostess Twinkies and CupCakes is at an all-time high since the snack cakes returned to shelves in July, 2013. The cakes are back under new ownership, and Hostess says sales are seven times greater than historic levels, and their bakeries are running at maximum levels.

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Many Airlines

airline1US Airways filed for bankruptcy twice, first in August 2002, then in September 2004. The airline had a history of financial difficulty, aggravated further by the Sept. 11th terrorist attacks.

Delta Airlines, the nation's third largest airline, went bankrupt in 2005 when the airline was unable to sustain the spike in fuel prices that came in the wake of Hurricane Katrina, and was overtaken by competing low-fare carriers. Eventually Delta exited bankruptcy in April 2007.

Northwest Airline, announced they were filing for bankruptcy for the same reasons in 2005, but emerged from bankruptcy in May 2007.

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Stockton, California

stockton1Stockton, California filed for bankruptcy in April of 2012, at the time the largest city in the nation to enter bankruptcy. The city owed $26 million and attempted to restructure some debt by cutting employment, renegotiating labor contracts, and slashing health benefits for workers. Library and recreation funding were also halved, and the Police Department was scaled-down, only responding to emergencies in progress. Needless to say, the city crime rate is among the highest in the nation.

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Jefferson County, Alabama

jeffersonJefferson County, Alabama was the previous record holder for the U.S. city with the highest debt filing for bankruptcy, owing $4 billion at the time when it filed for bankruptcy in 2011.

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Detroit, Michigan

detroit1The city of Detroit, Michigan filed for bankruptcy on July 18. The largest American city ever to file for bankruptcy, Detroit was once the nation's fourth most populous city. As the center of the American automobile industry, Detroit grew at a stunning rate in the first half of the 20th century, and has since declined at a similarly remarkable pace in recent decades. The city was home to 1.8 million in 1950, but now holds only 700,000 people, as well as thousands of abandoned buildings. With debt between $18 billion and $20 billion, this is the largest municipal bankruptcy filing in U.S. history.

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Chrysler & General Motors

general motors1Chrysler went bankrupt in April of 2009, valued at the time as being worth $39.3 billion. With the economy in a state of crisis and threatening automakers, President Obama ordered Chrysler into bankruptcy. The United Automobile Workers gained control of the company, and the federal government and Italian car-maker Fiat were made minority stakeholders. Two years later, Chrysler returned to profitability.

General Motors filed bankruptcy in June of 2009, valued at the time as being worth $91 billion. The rock of American manufacturing, hurt by years of weak sales, was dealt a heavy blow by the failing economy. A government bailout stepped in and saved the company from going out of business.

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enron Enron went bankrupt in 2001, valued at $65.5 billion at the time.

The energy heavyweight cracked as a result of its fraudulent accounting practices, kicking off the start of the malpractice scandals that plagued the U.S. in 2001.

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mciWorldCom filed for Chapter 11 in July 2002. The telecommunications giant joined Enron in early 2000 when the accounting and executive malpractice scandals were unfolding before the nation.

At the time of its demise it was valued at $103.9 billion. Bernie Ebbers, CEO of the company, went to jail for what was called then the "largest corporate fraud in U.S. history."

WorldCom emerged out of bankruptcy and was renamed MCI in 2004, later to be purchased by Verizon in 2005.

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Washington Mutual

wamu1Washington Mutual filed for bankruptcy in September, 2008. The savings-and-loan holding company was valued at $327.9 billion at the time, and the news about Lehman Brothers caused WaMu's demise.

Regulators seized the company after customers withdrew $16.7 billion over 10 days.

JPMorgan then bought WaMu, making Chase even larger.

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Lehman Brothers

lehmanLehman Brothers filed for Chapter 11 in September, 2008. Its value at bankruptcy was $691 billion, making it the largest bankruptcy in U.S. history. In the midst of the U.S. financial meltdown, the government made the decision not to bail out the giant investment bank, which was eventually liquidated.

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