Posted on

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.

More information on bankruptcy:

Facebooktwittergoogle_plusredditpinterestlinkedinmailFacebooktwittergoogle_plusredditpinterestlinkedinmailby feather
Posted on

November 2014 News

On November 7 & 8, 2014 Charles M. Ivey, III joined Pamela P. Keenan of Kirschbaum Nanney Keenan & Griffin, P.A. in presenting at the 37th Annual Bankruptcy Institute, located at the Omni Grove Park Inn in Asheville, NC. The seminar was hosted by the North Carolina Bar Association, and Charles’ presentation was entitled “Lenders Beware: You Just Think Your Debtors Owe You Money.” The presentation focused on portions of the Fair Debt Collections Practices Act (FDCPA), the Equal Opportunity Credit Act (ECOA), and case law interpreting some of these statutes and how lender mistakes may create liability for creditors. The firm’s partners Dirk W SiegmundSamantha K Brumbaugh, and Darren McDonough, along with Associates Charles (Chuck) M Ivey IV and Justin Kay were in attendance along with the greatest bankruptcy practitioners in the state to discuss some of the big issues plaguing the Bankruptcy Bar of North Carolina.

Facebooktwittergoogle_plusredditpinterestlinkedinmailFacebooktwittergoogle_plusredditpinterestlinkedinmailby feather
Posted on

5 Things To Know About Chapter 11 Bankruptcy

1) Automatic Stay:

As soon as the bankruptcy petition is filed with the court, the automatic stay goes into effect. The automatic stay prevents creditors from taking certain actions against your business. For instance, no further legal action can be brought against your business, including an attempt to collect a debt, repossess or foreclose property, or enforce a lien against your property (with certain limited exceptions). Certain creditors (such as a mortgage or secured creditor) can request that the bankruptcy court grant them an exception from the automatic stay in order for them to repossess or foreclose property. If granted, you may be required to continue making monthly payments to the creditor, although these payments are usually lower than the normal monthly payment, or file a plan to repay the loan within a reasonable time frame.

2) Ability to break leases and contracts:

The Bankruptcy Code allows businesses and individuals to break leases or contracts that are no longer advantageous to the business or individual that filed the bankruptcy petition. The Bankruptcy Court must approve such decisions, but if it’s in the best interest of the business to do so, leases may need to be broken. When broken (or rejected in bankruptcy terms), the opposing party to the contract or lease has the right to file a Proof of Claim to assert damages as a result of the breach. Usually these damages are paid out in the Plan of Reorganization, are usually substantially less than they would be outside of the bankruptcy, and are usually paid out at a fraction of what is owed.

3) Ability to cancel foreclosures/repossessions, deal with tax debts and payroll issues:

The Automatic Stay can prevent further action from being taken by creditors, including the IRS, state, and local departments of revenue. The Bankruptcy Code also allows businesses and individuals to repay arrears amounts and past due taxes (including payroll taxes) over successive years with no penalties.

4) Chapter 11 Discharge:

Discharge is the goal of every business or individual that files for relief under the Bankruptcy Code. In Chapter 11’s, the discharge takes effect when a plan of reorganization of the business or individual (debtor) is accepted by the creditors and confirmed by the court. After confirmation, the debtor must make payments according to the terms of the plan and abide by its provisions. The plan of reorganization creates new contractual obligations, but usually absolves the debtor (discharges) from the obligation to repay certain unpaid debts incurred prior to the petition date. Certain exceptions apply and only your attorney can advise you which debts are and are not discharged, and what your best course of action is.

5) Chapter 11 Plan of Reorganization:

The Plan of Reorganization is essentially a contract between the debtor and its creditors to repay certain debts over an agreed upon period of time and continue business operations. A Plan of Reorganization can also be thought of as a restructuring of financial affairs. A Plan of Reorganization can change amortization periods, interest rates, payment periods, and balloon payments, and can deal with all types of debts including secured, unsecured, and tax.

Facebooktwittergoogle_plusredditpinterestlinkedinmailFacebooktwittergoogle_plusredditpinterestlinkedinmailby feather
Posted on

October 2014 News

On October 23 & 24, 2014 the firm headed down to North Myrtle Beach, South Carolina for it’s yearly firm retreat. The yearly firm retreat has become an IMGT tradition, and is a good reminder to everyone that no matter how hard you work occasionally you need to set that work aside, kick your feet up, and drink a nice cold beer. But, with the retreat over, it’s time for us to dig back into work until next year’s retreat.

Facebooktwittergoogle_plusredditpinterestlinkedinmailFacebooktwittergoogle_plusredditpinterestlinkedinmailby feather