On Dec. 2, 2001, the massive energy firm Enron filed for Chapter 11 bankruptcy, kicking off a process that would end with its name being synonymous with corporate corruption and employee mistreatment.
The Houston, Texas-based megafirm had leaned hard into digital services during the 1990s, even toying with the idea of entering the broadcast TV space. When the dotcom bubble burst, the company’s value plummeted. But the losses sustained were covered up by executives who, using various accounting tricks, misled investors and the public into thinking Enron’s finances were in tip-top shape.
Enron’s bookkeeping manipulations were, somehow, missed by their accounting firm. But with time, analysts saw something was off. In 2001, after some leadership shuffles, the market turned against the company and investigators started uncovering the executives’ subterfuge.
When a planned merger with competitor Dynegy was axed, the writing was on the wall. Enron filed for bankruptcy a few days later, showing losses of $74 billion, the largest such filing at that point in U.S. history.
Even worse, employees on the lower levels of the totem pole had been encouraged to invest in the company’s stock as part of their retirement savings. When the company went bust, so did those retirement funds. Eventually some of those laborers filed a class action lawsuit and won an $85 million settlement.
For more on the Enron scandal, check out this article on Investopedia.
