With Black Friday weekend officially in the books, why not pay tribute to our spending spree and credit card debts by taking a look at some major companies and municipalities that filed for bankruptcy in 2013. Though there were some economic factors to cheer for this past year – the Dow Jones Industrial Average rose by 20% - there’s still plenty to be despondent about, as these three corporations and municipalities will tell you.
This summer, Detroit filed for Chapter 9 bankruptcy, earning itself the title of largest municipal bankruptcy filing in U.S. history with debts estimated to be $18-20 billion. And just today, bankruptcy judge Steven Rhodes, who’s overseeing the case, ruled that Detroit is insolvent and therefore eligible for Chapter 9 bankruptcy.
Once a manufacturing powerhouse, Detroit’s economic standing has taken a hit over the last few decades as global competition in the automobile industry has increased forcing many manufacturers to pack up and move production offshore. Unemployment is in the double digits, crime is rampant, and the population has decreased by 62% - down to 701,000 in 2013 from a high of 1,850,000 in 1950.
"The city of Detroit was once a hard-working, diverse, vital city, the home of the automobile industry, proud of its nickname the Motor City," Judge Rhodes said today. "The city needs help."
Rhodes’ decision may lead to approval in cuts to city workers’ pensions and retirement benefits – a truly saddening prospect.
Though Bitcoin’s value surpassed the $1,000 mark last month, not everything has been rosy in the world of digital currency. No, I’m not talking about the man who mistakenly threw out a hard drive containing $9 million in Bitcoins. I’m referring to Alydian, a U.S. Bitcoin mining solutions provider.
CoinLab, an up-and-comer in the Bitcoin incubating world, spun off Alydian, a company that aimed to develop an enterprise-level Bitcoin mining solution. Three months later, Alydian filed for Chapter 11 bankruptcy, revealing less than $50,000 in assets and over $3 million owed to creditors.
Competition mounted and Alydian’s technology became obsolete at a rapid pace. In the end, Alydian only mined about 3,041 Bitcoins and is in the process of selling assets off at bargain prices.
Girls Gone Wild
The adult entertainment company, synonymous with spring-break partying (and the accompanying morning-after shame), filed for Chapter 11 bankruptcy this past February in a bid to protect Girls Gone Wild – ahem – assets from an abiding lawsuit filed by Las Vegas business magnate Steve Wynn.
The Wynn lawsuit stems from some misdeeds done on the part of Girls Gone Wild creator Joe Francis. Just like his videos’ starlets, Francis partied a little too hard and found himself in debt to Wynn’s casino resort for $2 million. Unfortunately for Francis, the courts ruled in favor of Wynn in several lawsuits including $7.5 million for defamation after Francis accused Wynn of swindling customers and an additional $20 million in punitive damages for slander.
Most recently, Joe Francis was sentenced to 270 days in county jail in August 2013 on three counts of false imprisonment, one count of assault causing great bodily injury, and one count of dissuading a witness – all stemming from a 2011 incident at his Bel Air mansion.
Image Credits: Carlos Osorio, AP; Jason Laveris, GETTY