For companies filing Chapter 11 bankruptcy, it is a pretty safe bet that word will get out to the general public one way or another. If an entity is a small business or regional company, news of a plan for Chapter 11 reorganization may land a business in a local newspaper, or the Local section of a more widely circulated periodical. For major corporations, meanwhile, filing Chapter 11 bankruptcy is national news, something to be included in the Business section of most newspapers, and in some (in)famous cases, the front page.
Some of the biggest businesses in the United States are those centered around energy/utilities and transportation, but just the same, volatile prices and disastrous world events can cause demand and prices to swing wildly from good to bad.
The 2000s were a particularly bad time for a number of America’s biggest airlines given the plane hijackings of 9/11 and spikes in jet fuel costs in the middle of the decade. In 2001, Trans World Airlines filed for Chapter 11 after ceasing operations and assenting to a merger with American Airlines’ parent corporation, AMR. A number of prominent commercial flight services would follow in TWA’s footsteps in the years to come.
The UAL Corporation, owner of United Airlines, applied for Chapter 11 reorganization in 2002 and remains one of the biggest (in terms of assets) companies to do so in U.S. history. In a particularly striking fashion, meanwhile, Delta Air Lines and Northwest Airlines announced they were filing Chapter 11 bankruptcy in 2005 within an hour of one another, imaginably causing a sensation in the business world.
Some Chapter 11 reorganization plans are particularly notable for the circumstances they accompany. In February 2001, Enron Corporation, a major energy enterprise based in Houston, Texas, filed for Chapter 11 bankruptcy, the largest at the time of its filing.
The details of the bankruptcy order, though, have been lost somewhat in the scandal that ensued some months after when it was discovered that the company was the source of willful accounting fraud regarding its practices, prompting an investigation by the SEC, the eventual failure of accounting giant Arthur Andersen, and the enmity of the American people, who saw this fiasco as an exemplar of corporate avarice.
The only significant silver lining of the so-termed “Enron scandal” was the passage of the Sarbanes-Oxley Act of 2002, which enacted new standards for public companies and accounting firms in the United States.