Bankruptcy filings and the ripple effect
Seemingly every day, the news is filled with another story about a bankruptcy filing, or a development in a major bankruptcy case. Just in the last 4 months of 2008, companies such as Lehman Brothers and Tribune Company have filed Chapter 11 bankruptcies. Not to mention Merrill Lynch and AIG, each of which presumably would have filed but for government bailouts. The jury is still out for the Big 3 auto makers but the only question appears to be whether there will be bankruptcies or a large loan from taxpayers.
In addition, retailers, manufacturers, and service companies of all shapes and sizes have entered Chapter 11. The ripple effect leads to more filings. Other notable bankruptcies filed during the past 6 months include:
- Circuit City
- Bally Total Fitness (second bankruptcy filing in a year)
- Pilgrim's Pride Corporation (the largest chicken producer in the U.S.)
- Steve & Barry's
- LandAmerica Financial Group
- Eclipse Aviation Corp
- Lenox Group, Inc (giftware and collectible company)
- Metromedia Steakhouse, Inc. (parent of Bonanza and Ponderosa steakhouses)
- Mrs. Fields Original Cookies, Inc.
- EZ-Lube, Inc.
- KB Toys
The housing crisis has brought down banks such as Washington Mutual, Downey Savings, and Pomona First Federal (each sold in separate transactions facilitated by the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC)) and IndyMac (closed by the OTS and the FDIC and now operated as IndyMac Federal Bank). For an updated list of failed banks since October 2000, see http://www.fdic.gov/bank/individual/failed/banklist.html.
Bankruptcy terminology can be confusing to the uninitiated. Introducing Bankruptcy 101, a post by Greenberg Glusker's Business and Tax Blog, will seek to simplify this bankruptcy lingo you are reading about on-line or in your daily newspaper or simply hearing about on CNN, Fox, MSNBC or your cable news network du jour.
So stay tuned for the next bankruptcy post when we explain what is meant by "Chapter 11", and contrast it with other bankruptcy alternatives.
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