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December 2014 News

On December 18, 2014 Partner Charles M. Ivey, III and Associate Justin Kay were successful in getting a Plan of Reorganization confirmed in an individual Chapter 11 case. The individual held an ownership interest in assets worth $44,600,000 as of the filing of the bankruptcy case, as listed on the petition. Due to a few failed ventures, in addition to some mounting tax debts, the individual filed for relief under Chapter 11 of the Bankruptcy Code. Almost two years later, and after filing a total of six separate Plans of Reorganization, the firm of Ivey, McClellan, Gatton & Talcott, LLP were successful in getting every creditor of the Debtor to agree to the Plan treatment as proposed. To paraphrase from a comment of another individual within the Bankruptcy bar, the work on this case was of such superior quality that it compares favorably with any successful Chapter 11 in this district in the last five years. Congratulations for all the hard work performed on this case, and the successful result obtained.

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5 Largest Bankruptcy Cases of the Last 20 Years

Cities, municipalities, and even large corporations file bankruptcy in addition to individuals, couples, and local businesses. While individual, couple, and local business bankruptcy filings hit closer to home, they very rarely make the news or become of national importance, like those of larger national or international corporations do. The reasons behind large company bankruptcy filings are vast but most can be laid at the door of an economic downturn while others, riding high on the crest of an ever-growing bubble bound to burst at any moment, can be faulted for “creative bookkeeping.” Here, we provide a list of five corporations in order of lowest to highest declared assets that have filed bankruptcy in the last 20 years.

#5: CIT Group, Inc

CIT Group (FKA Commercial Investment Trust) provided commercial financing, lending, leasing and advisory services to more than 30 industries since its founding in 1908. Recently CIT became a bank holding company and, from 2004 to 2007, qualified for and received $2.3 billion in TARP (Troubled Asset Relief Program) federal funds. CIT filed for relief under Chapter 11 of the Bankruptcy Code on November 1, 2009 with $80.4 billion in declared assets. It emerged from bankruptcy 38 days later on Dec. 10, 2009.

#4: General Motors

Just as Chrysler had faced financial difficulties, General Motors Company was forced into bankruptcy in 2009 as a result of the lagging economy. GM filed for relief under Chapter 11 of the Bankruptcy Code on June 1, 2009 with declared assets of $91 billion and emerged from bankruptcy just over a month later. It was financed in part by the U.S. government which still owns a 27% stake in the company.

#3: WorldCom

As one of the largest telecommunications companies in the U.S. during the 1990s, WorldCom propped up its stock using “creative accounting” methods, providing a false appearance of growth and profitability. It filed bankruptcy on July 21, 2002 with declared assets of $103.9 billion. At the time, it was the largest company to ever file for Chapter 11.

#2: Washington Mutual

Washington Mutual, a savings bank holding company, experienced financial collapse when a 10 day period of bank runs in 2008 resulted in withdrawals of $16.4 billion. Washington Mutual Bank, under Washington Mutual’s control, was seized and placed into the receivership of the FDIC. The company filed for relief under the Bankruptcy Code on September 26, 2008 with declared assets of $327.9 billion.

#1: Lehman Brothers

The fourth largest investment bank in the U.S., Lehman Brothers experienced a devaluation of its assets which, in turn, resulted in a huge loss of clients. Having done business globally in banking, research, and trading, Lehman Brothers filed for bankruptcy relief on September 15, 2008 with declared assets of $691 billion.

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