Borders Group Bankruptcy: The Top 10 Businesses to Ever File for Chapter 11
The bookstore's filing isn't the first - or the biggest - in the history of companies who've sought protection from creditors.
Liquidation sales officially began on Friday for all 399 of Borders Group Inc.'s retail stores. The company, which filed for bankruptcy in February, is currently in talks to transfer as many as 35 of its stores to Books-A-Million, currently the country's third-largest book retailer.
Here are 10 of the largest bankruptcy filings in history.
1. Lehman Brothers Holdings Inc. (September 15, 2008) The 158-year-old investment bank imploded in the fall of 2008. The company had $638 billion in assets at the time of filing, making it the largest bankruptcy filling in the country's history. The investment bank was undermined by bad debts and tumbling stocks. Barclays Plc acquired the majority of Lehman's business.
2. Enron Corp. (December 2, 2001) The Houston, TX energy company's failure took the entire country by surprise. It had been dubbed the "most innovative company in America" for the sixth consecutive year by Fortune Magazine in February. After whistleblower Sherron Watkins exposed a scheme within the top ranks to keep $500 million of debt off of the books and hidden from investors. But, once Enron's $638 million debt was revealed, the Securities and Exchange Commission opened an investigation and the company filed for protection from creditors. Many of its high-level officers, including chief executive Jeffrey Skilling and company founder Kenneth Lay, received prison sentences.
3. Washington Mutual (September 26, 2008) Dubbed the biggest bank failure in U.S. history, federal regulators seized control of the savings and loan company (the biggest in America at the time) as a result of America's subprime mortgage crisis. WaMu was expected to lose approximately $19 billion on bad mortgages and an emergency sale of assets was brokered with JPMorgan Chase for $1.9 billion.
4. Blockbuster (September 24, 2010) It came as no surprise when the video rental giant filed in federal bankruptcy court citing nearly $1 billion in debt. Dish Network won the bidding war for the purchase of the company for $320 million in April of 2011 and has said it will keep more than 1,500 of Blockbuster's U.S. stores (more than 90 percent) open.
5. WorldCom In. (July 21, 2002) Then the nation’s number two long-distance phone company, WorldCom filed Chapter 11 one month after revealing it had incorrectly accounted $3.8 billion in operating expenses.
6. General Motors (June 1, 2009) Once king of the automotive world and the Fortune 500, General Motors followed Chrysler into bankruptcy, but unlike Chrysler who had reached an agreement to sell assets to Fiat before beginning its case, G.M. used $30 billion in debtor-in-possession loans from the U.S. Treasury to restructure on its own.
7. Pacific Gas & Electric Co. (April 6, 2001) California’s largest utility company for protection from creditors because of the state’s 1996 deregulation law and unreimbursed power costs. The company, which was saddled with $9 billion in debt, attempted to remedy the situation by notifying the Governor the year before, but no solution was reached.
8. Delta Airlines Inc. (September 14, 2005) The airline cited soaring jet-fuel prices and growing competition from low-fare carriers for it’s financial woes. Minutes later, Northwest Airlines also filled for bankruptcy, leaving the country with four of its major airlines under protection from creditors (United Airlines and US Airways filed motions previously).
9. Kmart (January 22, 2002) Credited as the largest retail bankruptcy in U.S. history, the Blue Light Special retailer secured $2 billion in debtor-in-possession financing and was successfully restructured under Sears Holding. The company’s shares have more than tripled since 2003.
10. Borders Group Inc. (February 16, 2011) The second-largest book retailer's Chapter 11 filing came as no surprise after years of decreasing sales and an ever-growing debt. It listed $1.28 billion in assets and $1.29 billion in debts as of Dec. 25, 2010 and initially closed 200 superstores while trying to restructure. But, as of Friday, Borders announced it would be shuttering all of its remaining locations.