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List of corporate collapses and scandals

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A corporate collapse typically involves the insolvency or bankruptcy of a major business enterprise. A corporate scandal involves alleged or actual unethical behavior by people acting within or on behalf of a corporation. Many recent corporate collapses and scandals have involved some type of false or inappropriate accounting (see list at accounting scandals).

List of major corporate collapses

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The following list of corporations involved major collapses, through the risk of job losses or size of the business, and meant entering into insolvency or bankruptcy, or being nationalised or requiring a non-market loan by a government.

Name HQ Date Business Causes Assets
Medici Bank   Florence 1494 Banking Owned by the Medici family, it ran up large debts due to the family's profligate spending, extravagant lifestyle, and failure to control the managers.
Mississippi Company   France Sep 1720 Colonialism Scottish economist John Law convinced the French government to support a monopoly trade venture in Louisiana. He marketed shares based on great wealth, which was highly exaggerated. A speculative bubble grew and then collapsed, and Law was expelled.
South Sea Company   Great Britain Sep 1720 Slavery and colonialism After the War of Spanish Succession, Great Britain signed the Treaty of Utrecht 1713 with Spain, ostensibly allowing it to trade in the seas near South America. In fact, barely any trade took place as Spain renounced the Treaty, however this was concealed on the British stock market. A speculative bubble saw the share price reach over £1000 in August 1720, but then crash in September. A Parliamentary inquiry revealed fraud among members of the government, including the Conservative Party Chancellor of the Exchequer John Aislabie, who was sent to prison.
Dutch East India Company   Batavian Republic 31 December 1799 Colonialism This huge early publicly listed multinational company founded in 1602 fell victim of declining markets in the late 18th century, internal corruption and excessive distribution of dividends (in excess of its profits), and finally Anglo-Dutch wars. It was nationalised by the Batavian Republic in 1796 but nevertheless closed down at the end of 1799.
Overend, Gurney & Co   United Kingdom June 1866 Banking After Samuel Gurney's retirement, the bank invested heavily in railway stocks. It went public in 1865, but was badly affected by a general fall in stock prices. The Bank of England refused to advance money, and it collapsed. The directors were sued, but exonerated from fraud.
Friedrich Krupp   Germany 1873 Steel, metals Krupp's business over-expanded, and had to take a 30m Mark loan from the Preußische Bank, the Bank of Prussia.
Danatbank   Germany 13 July 1931 Banking At the start of the Great Depression, after rumours about the solvency of the Norddeutsche Wollkämmerei & Kammgarnspinnerei, there was a bank run, and Danatbank was forced into insolvency.
Allied Crude Vegetable Oil Refining Corp   United States 16 Nov 1963 Commodities Commodities trader Tino De Angelis defrauded clients, including the Bank of America into thinking he was trading vegetable oil. He got loans and made money using the oil as collateral. He showed inspectors tankers of water, with a bit of oil on the surface. When the fraud was exposed, the business collapsed.
Herstatt Bank   West Germany 26 June 1974 Banking Settlement risk. Counterparty banks did not receive their USD payments, where Herstatt had received DEM earlier, prior to government forced liquidation.
Carrian Group   Hong Kong 1983 Real estate Accounting fraud. An auditor was murdered, an adviser committed suicide. The largest collapse in Hong Kong history.
Texaco   United States 13 April 1987 Oil After a legal battle with Pennzoil, whereby it was found to owe a debt of $10.5 bn, Texaco went into bankruptcy. It was later resurrected and taken over by Chevron.
Qintex   Australia 1989 Real estate Qintex CEO Christopher Skase was found to have improperly used his position to obtain management fees prior to the $1.5 billion collapse of Qintex including $700m unpaid debts. Skase absconded to the Spanish resort island of Majorca. Spain refused extradition for 10 years during which time Skase became a citizen of Dominica.
Lincoln Savings and Loan Association   United States 1989 Banking Financial institution that went bust following the Keating Five scandal.
Polly Peck   United Kingdom 30 Oct 1990 Electronics, food, textiles After a raid by the UK Serious Fraud Office in September 1990, the share price collapsed. The CEO Asil Nadir was convicted of stealing the company's money.
Bank of Credit & Commerce International   United Kingdom 5 July 1991 Banking Breach of US law, by owning another bank. Fraud, money laundering and larceny. Better known as BCCI.
Nordbanken   Sweden 1991 Banking Following market deregulation, there was a housing price bubble, and it burst. As part of a general rescue as the Swedish banking crisis unfolded, Nordbanken was nationalised for 64 billion kronor. It was later merged with Götabanken, which itself had to write off 37.3% of its creditors, and is now known as Nordea.
Barings Bank   United Kingdom 26 Feb 1995 Banking An employee in Singapore, Nick Leeson, traded futures, signed off on his own accounts and became increasingly indebted. The London directors were subsequently disqualified, as being unfit to run a company in Re Barings plc (No 5).
Bre-X   Canada 1997 Mining After widespread reports that Bre-X had found a gold mine in Indonesia, the stories were found to be fraudulent.
Livent   Canada November 1998 Entertainment In November 1998, Livent sought bankruptcy protection in the US and Canada, claiming a debt of $334 million. Garth Drabinsky, co-founder of Livent, was convicted and sentenced to prison for fraud and forgery. A judgment has been obtained against Deloitte & Touche in respect of Deloitte's negligence in conducting the audit for Livent's 1997 fiscal year.
Long-Term Capital Management   United States 23 Sep 1998 Hedge fund After purporting to have discovered a scientific method of calculating derivative prices, LTCM lost $4.6bn in the first few months of 1998, and was rescued by a private sector consortium.[1] $3.6 billion
FlowTex   Germany February 2000 Machinery FlowTex operated a Ponzi scheme in which non-existing construction equipment was sold to investors in order to immediately be leased back by FlowTex. This required an exponentially growing number of investors to afford the lease payments. The fraud was the largest corporate scandal in German history and caused financial damages of about 4.9bn DM (≈€3.3bn).
Equitable Life Assurance Society   United Kingdom 8 Dec 2000 Insurance The insurance company's directors unlawfully used money from people holding guaranteed annuity rate policies to subsidise people with current annuity rate policies. After a House of Lords judgment in Equitable Life Assurance Society v Hyman, the Society closed. Though never technically insolvent, the UK government set up a compensation scheme for policyholders under the Equitable Life (Payments) Act 2010.
CINAR   Canada March 2001 Animation Micheline Charest and Ronald Weinberg, the co-founders of this animation studio, were accused of transferring over $120 million to the Bahamas without the approval of its board of directors.[2] The company was later sold in 2004 to a consortium that includes Nelvana founder Michael Hirsch and was subsequently renamed Cookie Jar Group.[3] Cookie Jar in turn was acquired in 2012 by what is now called WildBrain. In 2016, Weinberg was sentenced to 8 years and 11 months in prison, and is currently on parole.[4]
HIH Insurance   Australia 15 March 2001 Insurance In early 2000, after increase in size of the business, it was determined that the insurance company's solvency was marginal, and a small asset price change could see the insurance company become insolvent. It did. Director Rodney Adler, CEO Ray Williams and others were sentenced to prison for fraudulent activity.
Pacific Gas & Electric Company   United States 6 April 2001 Energy After a change in regulation in California, PG&E determined it was unable to continue delivering power, and despite the California Public Utilities Commission's efforts, it went into bankruptcy, leaving homes without energy. It emerged again in 2004.
One.Tel   Australia 29 May 2001 Telecomms After becoming one of the largest Australian public companies, losses of $290m were reported, the share price crashed, and it entered administration. In ASIC v Rich[5] the directors were found not to have been guilty of negligence.
Swissair   Switzerland 2 Oct 2001 Aviation Overexpansion in the late 1990s and the aftermath of the September 11 attacks led to a dramatic fall in share prices. In 2007, several of the company's board members were charged over the airline's bankruptcy.[6] Assets were taken over by subsidiary Crossair which became Swiss International Air Lines, eventually purchased by Lufthansa of Germany.
Enron   United States 28 Nov 2001 Energy Directors and executives fraudulently concealed large losses in Enron's projects. A number were sentenced to prison.[7][8] $63.4 billion
Chiquita Brands Int   United States 28 Nov 2001 Food Accumulated debts, after a series of accusations relating to breaches of labour and environmental standards. It entered a pre-packaged insolvency, and emerged with similar management in 2002.[9]
Kmart   United States 22 Jan 2002 Retail After difficult competition, the store was put into Chapter 11 bankruptcy proceedings, but soon re-emerged.
Adelphia Communications   United States 13 Feb 2002 Cable television Internal corruption. The Directors were sentenced to prison.[8][10]
Arthur Andersen   United States 15 June 2002 Accounting A US court convicted Andersen of obstruction of justice by shredding documents relating to the Enron scandal.
WorldCom   United States 21 July 2002 Telecomms After falling share prices, and a failed share buy back scheme, it was found that the directors had used fraudulent accounting methods to push up the stock price. Rebranded MCI, it emerged from bankruptcy in 2004 and the assets were bought by Verizon.
Parmalat   Italy 24 Dec 2003 Food The company's finance directors concealed large debts.
MG Rover Group   United Kingdom 15 April 2005 Automobiles After diminishing demand, and getting a £6.5m loan from the UK government in April 2005, the company went into administration. After the loss of 30,000 jobs, Nanjing Automobile Group bought the company's assets.
Bayou Hedge Fund Group   United States 29 Sep 2005 Hedge fund Samuel Israel III defrauded his investors into thinking there were higher returns, and orchestrated fake audits. The Commodity Futures Trading Commission filed a court complaint and the business was shut down after the directors were caught attempting to send $100m into overseas bank accounts.
Refco   United States 17 Oct 2005 Broker After becoming a public company in August 2005, it was revealed that Phillip R. Bennett, the company's CEO and chairman, had concealed $430m of bad debts. Its underwriters were Credit Suisse First Boston, Goldman Sachs, and Bank of America Corp. The company entered Chapter 11 and Bennett was sentenced to 16 years in prison.
Bear Stearns   United States 14 Mar 2008 Banking Bear Stearns invested in the sub-prime mortgage market from 2003 after the US government had begun to deregulate consumer protection and derivative trading. The business collapsed as more people began to be unable to meet mortgage obligations. After a stock price high of $172 a share, it was bought by JP Morgan for $2 a share on 16 March 2008, with a $29bn loan facility guaranteed by the US Federal Reserve.
Northern Rock   United Kingdom 22 Feb 2008 Banking Northern Rock had invested in the international markets for sub-prime mortgage debt, and as more and more people defaulted on their home loans in the US, the Rock's business collapsed. It triggered the first bank run in the UK since Overend, Gurney & Co in 1866, when it asked the UK government for assistance. It was nationalised, and then sold to Virgin Money in 2012.
IndyMac   United States 11 July 2008 Banking IndyMac invested heavily in Alt-A mortgages and reverse mortgages. After many of these loans failed and couldn't be sold during the U.S. subprime mortgage crisis the company had to file for Chapter 7 bankruptcy.
Lehman Brothers   United States 15 Sep 2008 Banking
See also: Bankruptcy of Lehman Brothers

Lehman Brothers' financial strategy in from 2003 was to invest heavily in mortgage debt, in markets which were being deregulated from consumer protection by the US government. Losses mounted, and Lehman Brothers was forced to file for Chapter 11 bankruptcy after the US government refused to extend a loan. The collapse triggered a global financial market meltdown. Barclays, Nomura and Bain Capital purchased the assets which were not indebted.

AIG[8]   United States 16 Sep 2008 Insurance Out of $441 billion worth of securities originally rated AAA, as the US sub-prime mortgage crisis unfolded, AIG found it held $57.8 billion of these products. It was forced to take a 24-month credit facility from the US Federal Reserve Board.
Washington Mutual   United States 26 Sep 2008 Banking Following the sub-prime mortgage crisis, there was a bank run on WaMu, and pressure from the FDIC forced closure.
Royal Bank of Scotland Group (RBS)   United Kingdom 13 Oct 2008 Banking Following the takeover of ABN-Amro, and the collapse of Lehman Brothers, RBS found itself insolvent as the international credit market seized up. 58% of the shares were bought by the UK government.
ABN-Amro   Netherlands Oct 2008 Banking After a takeover battle between Banco Santander, Fortis and RBS, ABN-Amro was split up and divided between the banking consortium. Fortis and RBS were found to be heavily indebted due to the sub-prime mortgage crisis. Fortis was split and the Dutch part of Fortis was taken under government ownership by The Netherlands, thus reinstating the company in ABN-Amro The Belgian part was taken over by BNP-Paribas. RBS was taken under government ownership by the UK.
Bernard L. Madoff Investment Securities   United States Dec 2008 Securities Tricked investors out of $64.8 billion through the largest Ponzi scheme in history.

Investors were paid returns out of their own money or that of other investors rather than from profits.

Bernie Madoff told his sons about his scheme and they reported him to the SEC. He was arrested the next day.

$64.8 billion
Bankwest   Australia 2008 Banking Following the purchase of Bankwest by the Commonwealth Bank (CBA), there have been calls for a royal commission specifically into the conduct of bank following allegations made that the CBA engineered defaults of Bankwest customers in order to profit from clawback clauses under the purchase agreement.
Nortel   Canada 14 Jan 2009 Telecomms Following the financial crisis of 2007–2008, and allegations over excessive executive pay, demand for products dropped.
Anglo Irish Bank   Ireland 15 Jan 2009 Banking After the financial crisis of 2007–2008, the bank was forced to be nationalised by the Irish government.
Arcandor   Germany 9 June 2009 Retail After struggling to maintain business levels at its brand names Karstadt and KaDeWe, Arcandor sought help from the German government, and then filed for insolvency.
Hypo Real Estate   Germany 5 October 2009 Banking Depfa, one of the companies subsidiaries ran into liquidity problems in 2008 as a result of the financial crisis. This combined with heavy losses reported by Hypo Real Estate itself led to a bailout by the Deutsche Bundesbank and later to a complete nationalization of the company.
Schlecker   Germany 23 Jan 2012 Retail After continual losses mounting from 2011 Schlecker, with 52,000 employees, was forced into insolvency, though continued to run.
Dynegy   United States 6 July 2012 Energy After a series of attempted takeover bids, and a finding of fraud in a subsidiary's purchase of another subsidiary, it filed for Chapter 11 bankruptcy. It emerged from bankruptcy on 2 October 2012.
China Medical Technologies (CMED)   Cayman Islands 27 July 2012 Medical technology In 2009, an anonymous letter alleging possible illegal and fraudulent activities by management since 2007 was sent to KPMG Hong Kong, then CMED's auditor, and investigated by law firm Paul Weiss Rifkind Wharton & Garrison. Since 27 July 2012, pursuant to an Order by the Grand Court of the Cayman Islands, CMED has been under the control of Joint Official Liquidators. Post-bankruptcy filing, CMED's liquidator found itself probing an alleged $355 million insider fraud. In March 2017, the U.S. Department of Justice criminally indicted the CMED founder and CEO, as well as former Chief Financial Officer, charging them with securities fraud and wire fraud conspiracy for stealing more than $400 million from investors as part of a seven-year scheme.
National Bank of Anguilla and Caribbean Commercial Bank   Anguilla 12 August 2013 Banking In 2013, the two indigenous banks of Anguilla were intervened in by the East Caribbean Central Bank due to alleged irregular loans practices. After 3 years, both banks were put into bankruptcy, a new nationalized bank was created and the assets of the two bankrupt banks and the bank accounts of local account holders were transferred to the new bank and the local depositors were made whole by stealing about $180 million of money belonging foreign depositors, who lost their entire savings. The central bank was accused of fleecing the foreign depositors.[11][12]
Banco Espírito Santo (BES)   Portugal 3 August 2014 Banking An audit performed in 2013, for a capital raise performed in May 2014, uncovered severe financial irregularities and a precarious financial situation of the bank. In July 2014, Salgado was replaced by economist Vítor Bento, who saw BES in an irrecoverable situation. Its good assets were bought by Novo Banco, a vehicle founded by Portugal's financial regulators for that purpose, on August 3, which hired Bento as CEO, while its toxic assets stayed in the "old" BES, which got its banking license revoked by Portugal's regulators.
Dick Smith   Australia 5 January 2016 Retail On 5 January 2016, the retailer collapsed and was placed into receivership. McGrathNicol were appointed as administrators by the company's board and Ferrier Hodgson appointed by the company's major creditors National Australia Bank (NAB) and HSBC Bank Australia.
Theranos   United States September 2018 Health care Theranos claimed to have developed devices to automate and miniaturize blood tests using microscopic blood volumes. Theranos dubbed its blood collection vessel the "nanotainer" and its analysis machine the "Edison". Elizabeth Holmes, founder and CEO, reportedly named the device "Edison" after inventor Thomas Edison, stating, "We tried everything else and it failed, so let's call it the Edison."[13] This was likely because of a well-known Edison quote: "I've not failed. I've just found 10,000 ways that won't work."
Wirecard   Germany June 2020 Banking, Money transfer €1.9 billion, which apparently never existed, were found missing in a special audit. The CEO was arrested, the board filed for insolvency, and a warrant for the missing COO was issued.
FTX   Bahamas November 2022 Cryptocurrency, Cryptocurrency exchange
See also: Bankruptcy of FTX
CEO Sam Bankman-Fried resigns and FTX (company) files for Chapter 11 bankruptcy. John J. Ray III, the same attorney who oversaw the liquidation of Enron, is appointed CEO.[14]
Silicon Valley Bank (SVB)   United States March 2023 Banking
See also: Collapse of Silicon Valley Bank
Silicon Valley Bank lost money on bonds, prompting a run on the bank. The FDIC placed the bank into receivership, and its US assets were acquired by First Citizens BancShares and its UK assets were acquired by HSBC.[15][16][17]
Signature Bank   United States March 2023 Banking Due to losses and a bank run, prompted by the preceding collapse of Silicon Valley Bank, the FDIC placed the bank into receivership.[18]
First Republic Bank   United States May 2023 Banking Due to a global banking panic, mainly from the preceding collapses of Silicon Valley Bank and Signature Bank, a bank run forced the bank to be placed into receivership by the FDIC and then sold to JPMorgan Chase[19]
Signa Holding   Austria November 2023 Real Estate, Retail The company collapsed in 2023 with a €23 billion ($25 billion) of insolvencies.[20][21]


List of scandals without insolvency

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See also

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References

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  1. ^ Lowenstein, Roger (2000). When Genius Failed. Random House.
  2. ^ "Police allege $120M fraud involving Cinar founder". CTVNews. 2011-03-02. Retrieved 2021-05-24.
  3. ^ "Former Nelvana Execs Hirsh & Taylor Buy CINAR". Animation World Network. Retrieved 2021-05-24.
  4. ^ "Cinar founder Ronald Weinberg gets full parole on 9-year sentence". montrealgazette. Retrieved 2021-05-24.
  5. ^ [2009] NSWSC 1229
  6. ^ Fountain, Lynn (2016). Ethics and the Internal Auditor's Political Dilemma: Tools and Techniques to Evaluate a Company's Ethical Culture. CRC Press. p. 9. ISBN 978-1498767828. Retrieved 23 August 2019.
  7. ^ a b Jerry W. Markham (2006), A financial history of modern U.S. corporate scandals: from Enron to reform, M.E. Sharpe, ISBN 978-0765615831
  8. ^ a b c d e f g h i j Cohen, Jeffrey R.; Ding, Yuan; Lesage, Cédric; Stolowy, Hervé (August 1, 2008). "Managers' Behavior in Corporate Fraud". SSRN 1160076.
  9. ^ 'Chiquita files bankruptcy under pre-arranged plan' (11 November 2001) USA Today
  10. ^ a b c d e f g h i j k l m n Penelope Patsuris (26 August 2002), "The Corporate Scandal Sheet", Forbes
  11. ^ "ECCB takes over two Anguilla banks", Trinidad & Tobago Guardian, 14 August 2013
  12. ^ "Caribbean regulator accused of 'fleecing' foreign depositors", Offshore Alert, 28 December 2016
  13. ^ Carreyrou, John (21 May 2018). Bad blood: secrets and lies in a Silicon Valley startup (First ed.). New York. ISBN 978-1-5247-3165-6. OCLC 1029779381.{{cite book}}: CS1 maint: location missing publisher (link)
  14. ^ Gura, David (2022-11-23). "FTX's new CEO reveals just how big a mess he's dealing with". NPR. Retrieved 2023-09-01.
  15. ^ "Deal to buy Silicon Valley Bank calms bank fears, for now". AP NEWS. 2023-03-27. Retrieved 2023-05-10.
  16. ^ Egan, Allison Morrow,Matt (2023-03-10). "Silicon Valley Bank collapses after failing to raise capital | CNN Business". CNN. Retrieved 2023-05-10.{{cite web}}: CS1 maint: multiple names: authors list (link)
  17. ^ "Silicon Valley Bank: HSBC £1 deal to buy collapsed bank to boost profit". BBC News. 2023-05-02. Retrieved 2023-05-10.
  18. ^ "FDIC Releases Report Detailing Supervision of the Former Signature Bank, New York, New York". www.fdic.gov. Retrieved 2023-05-10.
  19. ^ "First Republic Bank seized, sold in fire sale to JPMorgan". AP NEWS. 2023-05-01. Retrieved 2023-05-10.
  20. ^ "Signa in Last-Ditch Funding Talks as Insolvency Wave Looms". bloomberg.com. bloomberg.com. November 25, 2023. Retrieved 5 December 2023.
  21. ^ "Signa unit confirms bankruptcy filing in letter to employees - Wirtschaftswoche". reuters.com. reuters.com. November 25, 2023. Retrieved 5 December 2023.
  22. ^ a b "The questions the Financial Ombudsman needs to answer". ABC News. April 2016. Retrieved 2016-04-02.
  23. ^ "ANZ Displayed Racial Bigotry to Oswals Court Hears".
  24. ^ "Emails Expose Bankers Racist Insults About Oswals". News.com.au.
  25. ^ "ANZ Accused Racial Bigotry Against Indian Billionaire Couple".
  26. ^ "ANZ facing $30m lawsuit over 'toxic' culture of sleaze". NewsComAu. 14 January 2016. Retrieved 2016-01-17.
  27. ^ "Corporate watchdog investigation on bank rate rigging nears end". ABC News. 11 February 2016. Retrieved 2016-02-26.
  28. ^ Walley, Jeff. "ASIC Expected To Launch Legal Action Against ANZ Over Alleged Interest Rate Manipulation". Herald Sun. Retrieved 26 February 2016.
  29. ^ ASIC, Originating Process available at, http://download.asic.gov.au/media/3563864/originating-process-asicvanz.pdf
  30. ^ "Calls for Royal commission into 'disgraceful' CommInsure". ABC News. 7 March 2016. Retrieved 2016-03-07.
  31. ^ "CBA compensation to victims of financial scandal 'a joke'". ABC News. 28 October 2015. Retrieved 2016-01-17.
  32. ^ Appleby, Julie (December 18, 2002). "HCA to settle more allegations for $631M". USA Today.
  33. ^ "KBC investit dans des centres de détention pour migrants aux États-Unis". RTBF. April 28, 2020. p. 1. Retrieved May 22, 2020.
  34. ^ "Luxembourg tax files: how tiny state rubber-stamped tax avoidance on an industrial scale". The Guardian. 5 November 2014. Retrieved 12 November 2014.
  35. ^ "The Panama Papers".
  36. ^ Ferguson, Adele. "Horror at 7-Eleven: no compensation and no good will for franchisees".
  37. ^ Cumming, Chris (October 11, 2013). "SunTrust to Pay $1.5B to Settle Mortgage Claims". American Banker. Vol. 178, no. F340. p. 13. Retrieved August 7, 2017 – via EBSCO.
  38. ^ "Judge deems Musk's 'funding secured' tweet false and misleading. A trial awaits". Los Angeles Times. 2020-04-15. Retrieved 2020-12-14.

Further reading

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