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Bankruptcy & Corporate Recovery

Bankruptcy & Corporate Recovery. Group Study Presentations. Lehman Brothers.

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Bankruptcy & Corporate Recovery

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  1. Bankruptcy & Corporate Recovery Group Study Presentations

  2. Lehman Brothers • Lehman Brothers was victim on the recent world financial crisis. The highly regarded investment firm from Wall Street had to file for bankruptcy protection in September 2008 when the $691 billion debt was too much for the strength of the company. Its property in New York as well as the North American investment banking was sold to the British bank Barclays, while even 80 of the bank’s smaller subsidiaries were closed. It’s the greatest bankruptcy case in American history.

  3. Enron • Enron is, without any doubt, the world’s most famous bankruptcy case, or at least it was before the world’s crisis. Unlike the previous examples which were result of a crisis, Enron’s bankruptcy was result of fraud. It caused the government to establish new practices and standards with the Sarbanes-Oxley Act of 2002. Enron owed $65.5 billion, but more important about the case was the conviction for accounting fraud for the management of the company.

  4. General Motors • Even the world’s largest automotive company couldn’t stand the financial crisis and filed for bankruptcy protection in June 2009. The manufacturer of Chevy, Buick, Cadillac, Opel, GMC and other car models was world’s largest industrial company, but the debt of $91 billion was too much for them.

  5. Chrysler • Obviously the car industry was strongly hit by the world’s business flows in recent years. Chrysler had narrowly avoided bankruptcy in 1979, but this time they couldn’t do anything to repeat that. The debt of $39 billion sent them close to liquidation, but after the file for bankruptcy protection they allied with Italian car manufacturers Fiat and the company was somehow saved.

  6. WorldCom • WorldCom was second largest long-distance telecom until 2002 when it filed for bankruptcy. It was result of CEO Bernie Ebbers’ accounting fraud, which brought the company into debt of huge $104 billion. Of course, now he is in prison, serving the 25 years long sentence, because of securities fraud, conspiracy, and filing false documents.

  7. Ernst & Young administrators, appointed to run the company, said that they would continue to trade "with a view to selling all or part of its business as a going concern." Zavvi, created by a management buyout of the Virgin Megastores just over a year ago, is Britain's largest independent entertainment retailer. It has 125 stores across Britain and Ireland, employing around 2,400 permanent staff and 1,050 temporary staff.

  8. United Airlines • Tilton was appointed Chairman, President, and CEO of UAL Corporation and United Air Lines, Inc. in September 2002. Tilton sought wage cuts from employees and applied for a U.S. government loan guarantee to avoid filing for bankruptcy. • By early December, the company had reached agreements with most of its unions for wage reductions, but its loan application was rejected Dec. 4. • Unable to secure additional capital, UAL Corporation filed for chapter 11 bankruptcy protection on December 09, 2002. The ESOP was terminated, although by then its shares had become virtually worthless. • Blame for the bankruptcy has fallen on the events of September 11, which triggered financial crisis in all the major North American airlines, coupled with the economic slowdown that was underway. UAL quickly received debtor-in-possession (DIP) financing to allow it to continue “business as usual” while it reorganized its debt, capital and cost structures.

  9. Delta Airlines • Delta Air Lines, Inc. is a United States airline based and headquartered in Atlanta, Georgia. It is the world’s largest airline in terms of passenger traffic and fleet size. Delta operates an extensive domestic and international network, spanning North America, South America, Europe, Asia, Africa, the Middle East, the Caribbean, and Australia. • The Company has been facing financial difficulties for a long time and ever since 2004, tried to stave off bankruptcy by restructuring the company with job cuts and expansion plans. However, in September 2005, it filed for bankruptcy for the first time in its 76-year history. The company cited high jet fuel prices and high labor costs as the two main factors. Delta was in $20.5 billion debt at the time of filing. On April 30, 2007, the airlines emerged from bankruptcy protection as an independent carrier.

  10. Objectives • Research into the background of the companies and their key problems. • Why they failed. • How they could have avoided failure. • What lessons can be learned. • Finally. If you were the management team running that company. What would you have done?

  11. Bye for now! Please ensure you Prepare for next session I’m ready forsome leisure time.

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