Enron was the energy company that collapsed in 2001 after its accounting scandal.
Originally formed in 1985, Enron grew from a natural-gas pipeline business into a major energy-trading company. It promoted itself as an innovative corporation that could trade contracts for gas, electricity, and other commodities around the world.
The company’s reported success depended heavily on complicated partnerships, optimistic valuations, and accounting practices that concealed debt and overstated profits. In 2001, revelations about its finances caused investor confidence to collapse. Enron filed for Chapter 11 bankruptcy protection on December 2, 2001, at the time the largest such filing in U.S. history.
The scandal also destroyed Arthur Andersen, Enron’s auditor, after the firm was convicted of obstruction of justice, although that conviction was later overturned. WorldCom was another major accounting scandal of the same era, but it was a telecommunications company rather than an energy company.