In this article we are going to list the 5 biggest bankruptcies in American history. For a detailed coverage of this topic and a more comprehensive list please take a look at the 21 biggest bankruptcies in American history.
5. WorldCom Inc.
Assets at time of bankruptcy (in millions): $103,914
WorldCom, one of the largest bankruptcies in American history, met its demise as a result of a major accounting scandal. The company, which was the second-biggest long-distance telephone company in the U.S. at the time, overstated its assets by more than $11 billion in 2002, resulting in its demise. The WorldCom scandal is one of the reasons why the Sarbanes-Oxley Act was passed while WorldCom, which was then renamed to MCI, was purchased by Verizon Communications Inc. (NYSE:VZ) in 2008.
4. Signature Bank
Assets at time of bankruptcy (in millions): $110,364
Signature Bank was closed on March 12, 2023, just two days after the collapse of SVB, when customers withdrew over $10 billion from the bank due to uncertainties caused by the SVB collapse not to mention the crypto-friendly Silvergate Bank also currently being in the process of liquidation. The bank was also scrutinized by the U.S. Department of Justice for its failure to properly check signs of money-laundering in its clients’ activities.
3. Silicon Valley Bank
Assets at time of bankruptcy (in millions): $212,000
We’ve already discussed Silicon Valley Bank’s collapse in great detail in the intro, and as to why it occurred. The full impact of the bank’s collapse still remains to be seen, but even in the short run, it has wreaked devastation and fear across the global banking industry.
2. Washington Mutual
Assets at time of bankruptcy (in millions): $327,913
It is still the largest bank in the U.S. to have fallen, having more assets than SVB and Signature Bank combined. In fact, it was the largest loan and savings company in the U.S. till the time of its collapse in 2008, after a nine day bank run resulted in nearly $17 billion being withdrawn from the institution. The banking subsidiaries of the company were then sold to JPMorgan Chase & Co. (NYSE:JPM).
1. Lehman Brothers Holdings
Assets at time of bankruptcy (in millions): $691,063
Easily topping the list of the 21 biggest bankruptcies in American history is Lehman Brother Holdings, which will take some beating considering its assets were valued at nearly $700 billion at the time of collapse. Even now, only 6 banks hold more assets than Lehman Brothers did at the time of its collapse. Lehman Brothers collapsed in 2008 after its involvement in the subprime mortgage crisis which resulted in an exodus of customers and its share price crashing.
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