Tuesday 11 March 2014

What You Can Learn from the Five Biggest US Bankruptcies

Filing for bankruptcy is no longer a measure that individuals use to regain control over their financial situation. It is also a measure that businesses, financial entities and even municipalities are considering as a way to deal with serious financial troubles. Here are the five biggest bankruptcies ever filed in the United States as well as lessons that you can learn in assessing your own financial situation.

1. Lehman Brothers 

Lehman Brothers Holdings filed for bankruptcy in 2008, and the filing was a shock to the business world. Prior to its filing, Lehman Brothers had over $690 billion in assets. The American public was able to learn about the dangers of sub-prime lending and the need for professional ethics in the world of investment banking. This case also shows the public that even highly prestigious organizations need to file for bankruptcy, thus taking away any stigma that is attached to this legal process.

2. Washington Mutual

Prior to its bankruptcy filing, Washington Mutual had $328 billion in assets. Washington Mutual was once a trusted bank for savings accounts and loans. After its filing, over $16 billion in deposits were withdrawn. This case showed Americans that even trusted banks can fail and how important it is to manage one's accounts with financial entities in good standing.

3. Worldcom

Worldcom filed for bankruptcy after it was discovered that the company engaged in an accounting scandal worth over $11 billion. Verizon Wireless ultimately acquired the company. This case showed that it never pays to resort to criminal activity as a way to avoid one's financial situation. It is better to face one's financial situation and even file for bankruptcy than try to evade the law.

4. General Motors

General Motors had over $91 billion in assets before filing its bankruptcy. The government bailed out G.M., and as a result it has a 73 percent interest in the company. This case showed Americans that sometimes the government must protect organizations that significantly contribute to the employment of thousands of workers.

5. CIT

CIT was another financial firm that was forced to file for bankruptcy after the financial crisis. It was also involved in the sub-prime mortgage lending process. When the market crashed in 2007, the company no longer could profitably engage in its investment scheme.
If you are thinking about filing for bankruptcy, then you should realize that it is more common than ever. The attorneys at Lynch & Belch P.C. are prepared to assess your situation and help you.

Do you have have any questions or suggestions? Write in comment section.

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