Thursday, Apr. 02, 2009

The Other Side of Bankruptcy

Bankruptcy looms large for General Motors. On March 30, President Obama wielded the "B" word like a sword, promising 60 more days of federal funding to keep the struggling carmaker afloat while it desperately tries to convince its constituencies — including bondholders, labor unions, pensioners, suppliers and dealers — to give up some of what they're owed in order to keep the firm alive. After that, all bets are off. Bankruptcy protection, and the ability it gives a company to break contracts and ruthlessly get rid of debt, might prove the only remaining option. (Chrysler also got a federal lifeline, but just for 30 days and specifically to hash out a merger with the Italian automaker Fiat.)

If GM does declare bankruptcy, it will be one for the ages. Since 1980, only 36 public companies with more than $10 billion in assets have gone bankrupt, according to a database maintained by UCLA Law School's Lynn LoPucki. Some two-thirds of large companies that enter bankruptcy emerge as stand-alone enterprises — though typically at half the size.

Here's a look at some of the most memorable bankruptcies.