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March Madness 2012: Bankruptcies for the Generations

Weil Restructuring

Once again, in the spirit of March Madness, we at the Bankruptcy Blog are launching our “Sweet Sixteen” of bankruptcy.  Last year, you voted on the most important bankruptcy decisions of all time.  As we’ve noted, this year’s March Madness poll will determine which chapter 11 cases (i.e., bankruptcies, as opposed to decisions) are the “Top Bankruptcies” of all time.
As the Bankruptcy Blog is all about transparency, we want to share a word regarding the methods that were used to determine which cases will be included in this year’s March Madness poll.  For the past month, we’ve been reaching out to leading industry professionals, soliciting their nominations for the top chapter 11 cases of all time.  Then, we asked you to submit your nominations for the “top bankruptcies” for this year’s poll.  After we tallied the votes, an elite selection committee met to consider the top contenders for the 2012 tournament bracket.  Where cases were only one or two votes apart, we debated the merits of each eligible bankruptcy case and, after just a few technical fouls (and some attempted point-shaving), we ultimately settled on the top chapter 11 cases for this year’s tournament bracket.  Based on the number of votes and the natural lines upon which the top twenty cases settled, we developed a bracket of four distinct regions: Heavy Industry, The Litigators, The Trendsetters, and The 2008 Crisis.  By popular demand, the first rounds of the tournament will be taking place in New York and Delaware.
Like the NCAA, we’ve expanded the tournament to include a play-in round.  Accordingly, the first round of voting (for the #4 seed in each region) will begin this Wednesday, March 14 (be sure to check back in to vote for your favorite!).  With the start of the NCAA Sweet Sixteen next week, we’ll begin our voting our Sweet Sixteen on Wednesday, March 21.  In each round of voting, we’ll be sharing our esteemed nominators’ rationale for their “top” chapter 11 case of all time, as well as insights from the top legal minds here at the Bankruptcy Blog.
Will a certain juggernaut case power its way through the tournament?  Will a deceased C-list celebrity continue to make her mark on the Bankruptcy Blog?  Which case will be this year’s VCU?  Will the experience and longevity of the decades-long cases outshine the younger “one and done” prepacks and 363 sales? Does the Bankruptcy Blog have the clout to get the President to vote this year?  We will be posting a new set of seeds every hour throughout the day, so check back throughout the day to see which cases made the cut and which will be relegated to the bankruptcy NIT.  And remember to keep checking back throughout the month to make your vote count!
 

 
 

2008 Crisis Trendsetters
1.  Lehman   1.  Enron
2. GGP
   2.  WorldCom
3. CIT     3.  Ionosphere Clubs
4.  New Century
   4.  Continental Airlines (both of them)
5. Charter Communications   5.  SCI Television  

 
     
Litigators   Heavy Industry
1.  Johns-Manville Corp.   1. General Motors/Chrysler
2.   A.H. Robins   2.  Vertis and American Color Graphics
3.  Texaco, Inc.   3.  Lyondell
4.  Marshall   4.  Northern Pacific Railroad
5.  Exide   5. Los Angeles Lumber    


 
Was your favorite case snubbed?  Let us know, and we may just feature your favorite case in a special post of the all-time greatest bankruptcies not to have been given a shot at glory.
Last Updated: 4:12:52 PM (Eastern), March 12, 2012

Footnotes:
  1. With the notable exceptions of Harvey Miller and Alan Miller, no Weil attorneys voted in this initial poll.
  2. Case No. 09-11435 (JMP) (Bankr. S.D.N.Y. 2009). Unable to refinance roughly $22 billion of debt in the wake of the credit crisis, the fourth-largest cable operator in the country filed a prearranged chapter 11 and used reinstatement as one of the key components of its restructuring.
  3. Case No. 89-00660 (HSB) (Bankr. D. Del. 1989): The ephemeral case that put Delaware on the map as a choice bankruptcy venue. Although Judge Helen Balick quickly dismissed this involuntary chapter 7 case, she first determined that a company’s state of incorporation was equivalent to its domicile or residence and could, therefore, be used to establish venue under 28 U.S.C. § 1408.
  4. Case No. 02-11125 (KJC) (Bankr. D. Del. 2002): In the spring of 2002, North America's largest transportation battery manufacturer (and Europe's second largest), charged into bankruptcy amid fears of default on its more than $2.5 billion in debt, and set the stage for one of the most electrifying valuation fights in bankruptcy history.
  5. Case No. 31352 (RJ) (S.D. Cal 1938). While this shipbuilding operation thrived during World War I, dwindling post-war demand and poor management decisions (including an ill-fated foray in the lumber business) pushed it to restructure under the Bankruptcy Act.
  6. Case No. LA 96-12510 (SB) (Bankr. C.D. Cal. 1996): Vickie Lynn Marshall (known to many as Anna Nicole Smith) was forced to file for chapter 11 protection after suffering a default judgment of more than $700,000 in a sexual harassment suit brought by her former housekeeper and nanny.
  7. Case No. 07-10416 (KJC) (Bankr. D. Del. 2007). Amid a surge in homeowner defaults, the largest independent U.S. provider of subprime mortgages filed for chapter 11 in April 2007, exposing a subprime mortgage meltdown that would soon bring the global financial system to its knees.
  8. Case Nos. 83-04020 (Bankr. S.D. Tex. 1983) and 90-932 (MFW) (Bankr. D. Del. 1990): When high labor costs landed Continental in bankruptcy for the first time in 1983, they filed close to home in the Southern District of Texas; for their second filing in 1990, the airline opened up a new route and became one of the first major companies to file for bankruptcy in the District of Delaware.
  9. Case No. 1,252 (Whitson) (C.C. Wash. 1909). After the Coeur d'Alene Railway & Navigation Company incurred $23,675.85 in debt during the construction of a railroad in Idaho, its property was transferred to the Northern Pacific Railway Company, thereby setting in motion a multitude of issues and leading to the appointment of a receiver for these railroads.
  10. Case No. 09-16565 (ALG) (Bankr. S.D.N.Y. 2009). CIT's successful prepackaged chapter 11 case (the fifth largest in U.S. history) marked the first time a major financial institution has been able to restructure successfully after filing for chapter 11, challenging conventional views that a financial firm could not survive bankruptcy and getting the case done in 36 days.
  11. Case No. 89-10448 (BRL) (Bankr. S.D.N.Y. 1989): Globetrotting Eastern Airlines became a debtor in a trendsetting chapter 11 case when the filing of its then unknown New York subsidiary, Ionosphere Clubs, established venue in the Southern District of New York for the Miami-based airline.
  12. Case No. 87-20142 (HS) (S.D.N.Y. 1987).: After a Texas appellate court upheld a judgment against Texaco of over $10 billion in its dispute with Pennzoil, the nation's third-largest oil company filed, what was at the time, the largest bankruptcy case in history.
  13. Case No. 09-10023 (REG) (Bankr. S.D.N.Y. 2009). This case arose from the failed $12.5 billion leveraged buyout of Lyondell by Basell AF S.C.A. in December 2007.
  14. Case No. 09-11977 (ALG) (Bankr. S.D.N.Y. 2009). When the collapse of the credit markets made it impossible to refinance its maturing debt outside of chapter 11, one of the largest owners of shopping centers and other retail properties in the United States filed for chapter 11 protection with approximately $29.6 billion in assets and $27.3 billion in liabilities. A year and a half later, the 388 GGP debtors successfully emerged from chapter 11 after confirming full-pay plans.
  15. Case No. 02-13533 (AJG) (Bankr. S.D.N.Y. 2002): Once a success story of the 1990s, a series of rapid acquisitions and a massive accounting scandal led to WorldCom’s bankruptcy filing, shaking an already unsteady telecommunications industry.
  16. Case No. 85-01307-R (Bankr. E.D.Va. 1986): After betting the company on an untested medical device that ended up being harmful to its users, A.H. Robins became a lesson in how mass-tort cases operate in bankruptcy.
  17. Case No. 08-11460 (CSS) (Bankr. D. Del. 2008). These two printing companies filed joint prepackaged chapter 11 plans to restructure combined obligations of over $1 billion, merge the companies, and distribute equity in the combined and reorganized entity to creditors.
  18. Case No. 08-11135 (JMP) (Bankr. S.D.N.Y. 2008). “This is the biggest, the most incredibly complex, the most impossibly challenging international bankruptcy that ever was.” The Honorable James M. Peck, United States Bankruptcy Judge
  19. Case No. 01-16034 (AJG) (Bankr. S.D.N.Y. 2001): Amidst allegations of institutional accounting fraud, later known as the “Enron Scandal,” the Houston-based energy company sought bankruptcy protection in the Southern District of New York.
  20. Case Nos. 82 B 11656 - 82 B 11676 (S.D.N.Y. 1982): Facing thousands of asbestos-related lawsuits, the largest provider of asbestos-products and raw asbestos filed for chapter 11 protection and created the asbestos trust that formed the model for today's section 524(g) of the Bankruptcy Code.
  21. Case No. 09-50026 (REG) (Bankr. S.D.N.Y. 2009); Chrysler, Case No. 09-50002 (SMB) (Bankr. S.D.N.Y. 2009). Already burdened by their cost structure and benefit obligations, General Motors and Chrysler were forced into chapter 11 after the financial crisis caused a freeze-up in the consumer and commercial credit markets, which led to the intervention of the Federal government in a 363 sale to avoid the piecemeal liquidation of these iconic manufacturing giants.
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