Bankruptcy is a word that strikes fear in the hearts of business owners everywhere. Nobody wants to have to face what is ironically called bankruptcy “protection” in their lifetime but imagine how difficult it would be for a company that has been in business for a really long time, (more than 100 years in some cases).
It used to be that companies that can survive that first difficult year in business are more of a sure thing. But, times have certainly changed. Seemingly successful companies that we, the buying public, once thought were impervious to financial woes (and would be around forever), have been shutting their doors left and right or simply choosing BK as an alternative to having to pay their massive debts. So, here are 25 iconic companies that filed for bankruptcy.
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1. Gibson Guitars
Nashville-based Gibson Guitars was founded in 1892 and is one of the most famous names in guitars worldwide. But, now it’s facing bankruptcy and, at the time of their Chapter 11 BK filing, Gibson Guitars was more than $100 million in debt and, in fact, that number could quite possibly be as high as $500 million, according to the company’s filing in the state of Delaware.
How did this happen? After all, this is the company that made guitars for such great guitarists as Les Paul, Jimmy Page, Joe Perry, Bob Marley, the Who’s Pete Townshend, and quite possibly the best guitarist ever, the inimitable Eric Clapton. In addition, Gibson also owns both Baldwin and Wurlitzer, divisions that are famous for making pianos, jukeboxes, and organs. Apparently, it was due to some seriously bad business decisions on the part of financial management led by former CFO Bill Lawrence.
Gibson does have a plan for getting back on its famous musical feet. The company plans on liquidating their consumer electronics division and putting into effect the reorganization of its professional audio musical instrument business. According to a Gibson press release, the company is expected to come out of the bankruptcy armed with less debt, sufficient financing, and a platform that is both stronger and focused more on musical instruments.
2. Toys R Us
Toys R Us blames recent changes in consumer shopping behavior and preferences, as well as the need for speed in our ever-evolving retail landscape, for their recent BK filing. Just as a number of malls nationwide are blaming Amazon for the decreasing foot traffic, Toys R Us seemed to be falling behind the massive online giant as well.
And, much like small brick-and-mortar retailers blamed Walmart for their lagging business in the past, so are many companies these days placing the blame squarely on Amazon. It seems the bigger Amazon gets and the more markets they are involved in, not to mention their high-tech strides like using drones for faster delivery, the more trouble iconic companies like Toys R Us have in competing. It seems that nobody wants to be a “Toys R Us kid” anymore.
3. The Limited
This U.S-based ladies’ apparel chain recently filed Chapter 11 following the closing of all 250 Limited stores. Their intellectual property, including the company website address, social media accounts, and trademarks, was acquired by a private equity firm called Sycamore Partners. Their extensive portfolio also includes retailers Coldwater Creek, Nine West, and the entire Belk department store chain. A spokesperson stated that brick-and-mortar retail businesses are simply declining due to high fixed costs and thin margins. Sadly, in this case, 4,000 workers lost their jobs.
4. CIT Group
CIT Group filed Chapter 11 in November 2009 with a value at that time of $80.4 billion. They were a major lender that unfortunately was brought down, like so many other lenders, by the credit crunch of 2008., as well as a planned expansion. But, 38 days after their ill-fated expansion, the Troubled Asset Relief Program
(TARP) bailed them out.
5. Lionel Corp.
Lionel trains were in production from 1900 to 1969. Railroad model enthusiasts worldwide loved their Lionel model trains, mainly because they were so authentic. During Lionel’s peak years, the 1950s to be exact, they sold $25 million worth per year.
Following the sale of the Lionel train product lines in 1969, the corporation was reborn as a holding company specializing in toy stores. By the time the early 80s came along, Lionel was operating around 150 stores, including Lionel Play Town, Lionel Toy City, Lionel Toy Town, Lionel Kiddie City, Lionel Playworld, and Lionel Toy Warehouse. For a while, Lionel was actually the second-largest chain of toy stores in the country. The company started having financial difficulties again during the recession in the early 1980s, filing Chapter 11 in February 1982.
After reducing their toy store chain to only 55 stores, Lionel then saw regrowth to 100 stores by 1991, becoming the fourth-largest U.S. toy retailer. Financial troubles hit again and the advent of major discount stores, like Toys R Us, and their lower prices made it difficult for Lionel stores to compete.
Following numerous unprofitable quarters, Lionel Corp. again filed Chapter 11 on June 14, 1991. When they couldn’t come to an agreement with creditors, in 1993, they announced the liquidation of all stores and went out of business.
6. Pacific Gas & Electric Co (PG&E)
This company was valued at $36.15 billion at the time of its 2001 chapter 11 filing. So what happened? Well, California’s biggest utility company apparently became just the latest victim to CA’s electricity crisis of 2000 to 2001. There were blackouts all over the state and power costs skyrocketed. The problem was mainly blamed on California’s 1996 deregulation of its energy industry in 1996. At the time, Enron actually cut off power for the purpose of manipulating the prices, which worsened the crisis, especially for PG&E.
7. General Motors (GM)
The giant automaker filed Chapter 11 in June 2009 with a value at that time of $91 billion. What could possibly bring such a major player in the American manufacturing field down? Well, they were hurt badly by many years of sales that were steadily weakening. But, then the 2008 financial crash came along and did them in altogether, causing their bankruptcy. However, a government bailout was successful at saving GM from total annihilation.
8. Wet Seal
This California-based retailer of what was supposed to be trendy apparel for American teens had to file for bankruptcy due to the fact that it failed to make a connection with its buying public. Teenagers are well-known for being fickle consumers, so it’s no wonder this company failed. It closed all of its stores and filed Chapter 11 back in 2015, which was actually the company’s second filing. At that time, they had between $10 million and $50 million in assets but between $50 million and $100 million ln liabilities.
9. Lehman Brothers
They filed Chapter 11 in September 2008. At the time, the company was valued at a whopping $691 billion. When the 2008 financial meltdown started accelerating, the U.S. government decided against bailing out this gigantic investment bank. This was truly a controversial choice. However, good or bad, that was their choice and Lehman Brothers was eventually liquidated.
10. MCI WorldCom
This company started out in 1983 as Long Distance Discount Services. The name was changed in 1995 to WorldCom. There were numerous mega-mergers that were responsible for transforming the company and the name was changed again in 1998, this time to MCI WorldCom. However, the telecom industry took a nosedive and the company’s upper-management started resorting to accounting tricks in an attempt to keep their stock afloat. Then, in 2002, came the big reveal of some pretty complex accounting fraud issues. The company filed for bankruptcy protection and changed the name, yet again, only this time it was back to just plain MCI. Verizon purchased the company in 2006, and the majority of its operations are now called Verizon Business.
11. Thornburg Mortgage
This major U.S. mortgage company filed Chapter 11 in May 2009. The company’s value at the time was $36.5 Billion. So, what happened to cause the problem? Well, like many other mortgage lenders, Thornburg was hit by the 2008 housing crash and credit crunch. The company’s fall showed everyone that the crisis didn’t only affect subprime lenders as many thought. In fact, Thornburg’s specialty was actually mortgages that exceeded $417,000 and they were only made to borrowers who had good credit. Following the bankruptcy, Thornburg Mortgage was liquidated.
Chrysler filed Chapter 11 in April 2009 when the company was valued at $39.3 billion. So, what happened that could actually affect such an iconic company with so much money? The 2008 financial crisis had started spreading to the wider economy. At that time, it was threatening major automakers, so then President Obama stepped in and ordered Chrysler to file for bankruptcy protection. Then, the United Automobile Workers took control of the company and Fiat, as well as the federal government, became stakeholders.
By two years after their bankruptcy, Chrysler was once again profitable.
13. Eastern Airlines
Eastern Airlines started out in the 1920s as a U.S. Postal Service mail carrier. By the 50s, they were dominating most of the East Coast corridor in the field of domestic travel via major acquisitions and rapid expansion. Eastern thrived all the way into the 70s, when it became a member of the “big four” major airlines in the U.S. However, following the Air Transportation Deregulation Act of 1978, the airline started to falter and then the deterioration of their labor relations pushed the company over the edge and into a 1989 bankruptcy. At that particular time, it was the country’s biggest airline bankruptcy in history. In 1991, Eastern ceased to operate.
14. Sports Authority
Once this was the #1 biggest sporting goods chain in the entire country. However, seriously weak e-commerce plus mounting debt had hobbled the retailer, forcing it into bankruptcy. Much of the problem was attributed to the ever-changing retail environment and, in spite of the fact that the sports apparel retail future appears to look bright, competition has been intensifying as more and more brands enter the game, like Lululemon, as well as major stores like Target and Wal-Mart, plus popular online players like Amazon and Fabletics.
In the history of business, there has never been any other company that saw such a dramatic rise and fall like this energy company that was based in Houston. Enron filed for bankruptcy protection in 2001. At the time, it had 22,000 employees and $111 billion in revenues for the year 2000. It was actually the biggest bankruptcy ever in U.S. history at the time. What happened? Well, massive accounting fraud had been exposed and made Enron the universal symbol for corruption and corporate fraud. Enron’s value at the time of the bankruptcy was $65.5 billion.
16. Pan Am
Pan American World Airways, (aka Pan Am for short), was a well-known international airline that did business between 1927 and 1991. That was the year that Pam Am ceased all operations. It followed more than ten years of financial losses that kept mounting and resulted in bankruptcy. It’s been defunct for 17 years now but will probably always be a pop culture icon. Who could ever forget that iconic blue circular logo that is actually used on all kinds of designer travel bags of today to symbolize modern-day luxury travel?
This company filed Chapter 11 in 2002. At that time, Conseco was worth $61.4 billion and was a major financial firm and insurer. They acquired way too many companies during the 90s, causing the need for bankruptcy. One of the companies that they purchased was Green Tree Financial, which was a mobile-home sales financier. It caused the company a great deal of financial damage in the long run.
18. Washington Mutual (WaMu)
This major U.S. bank filed Chapter 11 in September 2008 with a value at that time of $327.9 billion. Why? When Lehman Brothers became the first to fall during the 2008 crisis, they took WaMu with them. After the bank’s customers made withdrawals in the amount of $16.7 billion over a 10-day period, the savings-and-loan holding company that was WaMu was seized by regulators. However, JPMorgan bought it and made it even more of a big bank that simply couldn’t fail.
19. Remington Outdoor
Remington was founded in 1816. Being one of the oldest manufacturers of guns in the country, however. couldn’t save Remington from having to file for bankruptcy protection in March 2018. The company’s problems have been attributed to declining sales and mounting debt. Their BK filing stated that the company had $100 million to $500 million in debt and their assets were estimated to be in the same range. Remington will be continuing to operate under bankruptcy protection.
20. Adelphia Communication Corp.
This bankruptcy is actually one of the 12 largest in U.S. history as far as assets go, according to BankruptcyData.com. They filed Chapter 11 in June 2002, the same year that WorldCom (the #1 largest bankruptcy) filed after being brought down by fraud. Adelphia had been under investigation by two federal grand juries as well as the Securities and Exchange Commission (SEC). Bondholders have been quoted as saying that they’ll be fighting to block the sale of Adelphia’s assets.
21. DeLorean Motor Co.
Who could ever forget that iconic DeLorean in the “Back to the Future” movies? They used the company’s trademark stainless steel model for the films. Unfortunately, being in major motion pictures may do a lot for big actors but for car manufacturers? Not so much. Founded in 1975, DeLorean Motor Co. started making sports cars with those unforgettable gull-wing doors. Later, however, the DeLorean DMC-12 sports car simply wasn’t in demand by car buyers in spite of a major amount of publicity that surrounded it. The company declared bankruptcy in 1982 and went into receivership.
Although TWA didn’t really peak until the 80s, it was actually founded in 1930s. Then, a major lack of investment funds for building new planes, along with airline deregulation, hit the company really hard. A 1985 hostile takeover resulted in the acquisition of TWA by Carl Icahn, who pocketed almost $500 million when he took the company private. At the same time, he saddled the company with $540 million worth of debt. By 1989, TWA had been stripped of its assets and struggled to keep up with the massive debt payments and had to declare bankruptcy. It was purchased by American Airlines in 2001.
23. American Airlines
Then, ironically, American’s parent company (AMR Corp.) filed Chapter 11 in 2011. AMR had been struggling for quite some time, therefore the BK wasn’t exactly an unexpected development. At one point during 2011, the company’s stock was down by as much as 79 percent. AMR did, however, have cash reserves on-hand of $4.1 Billion for ensuring uninterrupted services during the bankruptcy proceedings. The company’s new CEO cited global economic uncertainty that resulted in revenue instability, as well as the rapid rise in fuel prices and intensified competitive challenges, as the reasons behind the filing.
24. Payless ShoeSource
This is a very popular discount shoe retailer with 4,400 stores in 30 or more countries. The company filed for Chapter 11 bankruptcy protection with a specific goal in mind. They were aiming at restructuring their debt load and boosting their balance sheet. Payless became the 10th major retailer in 2017 to file and it was only April. However, Payless emerged from bankruptcy in August.
25. Eastern Outfitters
This company, which was owned by Versa Capital Management and was the parent company of Eastern Mountain Sports and Bob’s Stores, had to file for Chapter 11 in February 2017. The bankrupt chain was then acquired by Sports Direct in April. Intense competition in the sporting goods field was blamed for taking its toll on Eastern Outfitters, as well as many other major players in that particular retail sector.