List of corporate collapses and scandals


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 false or inappropriate accounting of some sort.

List of a few major corporate collapses

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.
NameHQDateBusinessCausesAssets
Medici BankBankingOwned by the Medici family, it ran up large debts due to the family's profligate spending, extravagant lifestyle, and failure to control the managers, their bank went insolvent.
Mississippi CompanyColonialismScottish 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 CompanySlavery and colonialismAfter the War of Spanish Succession, the UK 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 UK 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 Tory Chancellor of the Exchequer John Aislabie, who was sent to prison.
Dutch East India Company31 December 1799ColonialismThis 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, 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 & CoBankingAfter 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 AGSteel, metalsKrupp's business over-expanded, and had to take a 30m Mark loan from the Preußische Bank, the Bank of Prussia.
Danatbank13 July 1931BankingAt 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 Corp16 Nov 1963CommoditiesCommodities 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 Bank26 June 1974BankingSettlement risk. Counterparty banks did not receive their USD payments, where Herstatt had received DEM earlier, prior to government forced liquidation.
Carrian GroupReal estateAccounting fraud. An auditor was murdered, an adviser committed suicide. The largest collapse in Hong Kong history.
Texaco13 April 1987OilAfter 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.
QintexReal EstateQintex 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 AssociationBankingFinancial institution that went bust following the Keating Five scandal.
Polly Peck30 Oct 1990Electronics, food, textilesAfter 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 and Commerce International5 July 1991BankingBreach of US law, by owning another bank. Fraud, money laundering and larceny.
NordbankenBankingFollowing 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 Bank26 Feb 1995BankingAn 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 .
Bre-XMiningAfter widespread reports that Bre-X had found a gold mine in Indonesia, the stories were found to be fraudulent.
LiventEntertainmentIn November 1998, Livent sought bankruptcy protection in the US and Canada, claiming a debt of $334 million. Garth Howard Drabinsky, co-founder of Livent, was convicted and sentenced to prison for fraud and forgery. A judgment has been obtained against Deloitte & Touche LLP in respect of Deloitte's negligence in conducting the audit for Livent's 1997 fiscal year.
Long-Term Capital Management23 Sep 1998Hedge fundAfter purporting to have discovered a scientific method of calculating derivative prices, LTCM lost $4.6bn in the first few months of 1998, and required state assistance to remain afloat.$3.6 billion
FlowTexMachineryFlowTex 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.
Equitable Life Assurance Society8 Dec 2000InsuranceThe 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 Act 2010.
HIH Insurance15 March 2001InsuranceIn 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 and Electric Company6 April 2001EnergyAfter a change in regulation in California, the company determined it was unable to continue delivering power, and despite the California Public Utility Commission's efforts, it went into bankruptcy, leaving homes without energy. It emerged again in 2004.
One.Tel29 May 2001TelecommsAfter 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 the directors were found not to have been guilty of negligence.
WorldCom21 July 2001TelecommsAfter 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 Inc, it emerged from bankruptcy in 2004 and the assets were bought by Verizon.
Swissair2 Oct 2001AviationOverexpansion 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. Assets were taken over by subsidiary Crossair which became Swiss International Air Lines, eventually purchased by Lufthansa.
Enron28 Nov 2001EnergyDirectors and executives fraudulently concealed large losses in Enron's projects. A number were sentenced to prison.$63.4 billion
Chiquita Brands Int28 Nov 2001FoodAccumulated 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.
Kmart22 Jan 2002RetailAfter difficult competition, the store was put into Chapter 11 bankruptcy proceedings, but soon re-emerged.
Adelphia Communications13 Feb 2002Cable televisionInternal corruption. The Directors were sentenced to prison.
Arthur Andersen15 June 2002AccountingA US court convicted Andersen of obstruction of justice by shredding documents relating to Enron scandal.
Parmalat24 Dec 2003FoodThe company's finance directors concealed large debts.
MG Rover Group15 April 2005AutomobilesAfter 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 Group29 Sep 2005Hedge fundSamuel 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.
Refco17 Oct 2005BrokerAfter 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 Stearns14 Mar 2008BankingBear 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 Rock22 Feb 2008BankingNorthern 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.
Lehman Brothers15 Sep 2008BankingLehman 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.
AIG16 Sep 2008InsuranceOut 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 Mutual26 Sep 2008BankingFollowing the sub-prime mortgage crisis, there was a bank run on WaMu, and pressure from the FDIC forced closure.
Royal Bank of Scotland Group 13 Oct 2008BankingFollowing the takeover of ABN-Amro, and the collapse of Lehman Bros, RBS found itself insolvent as the international credit market seized up. 58% of the shares were bought by the UK government.
ABN-AmroBankingAfter 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 LLCSecuritiesTricked 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.
Madoff told his sons about his scheme and they reported him to the SEC. He was arrested the next day.		$64.8 billion
BankwestBankingFollowing the purchase of Bankwest by the Commonwealth Bank Of Australia, 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.
Nortel14 Jan 2009TelecommsFollowing the financial crisis of 2007–2008, and allegations over excessive executive pay, demand for products dropped.
Anglo Irish Bank15 Jan 2009BankingAfter the financial crisis of 2007-2008, the bank was forced to be nationalised by the Irish government.
Arcandor9 June 2009RetailAfter struggling to maintain business levels at its brand names Karstadt and KaDeWe, Arcandor sought help from the German government, and then filed for insolvency.
Schlecker23 Jan 2012RetailAfter continual losses mounting from 2011 Schlecker, with 52,000 employees, was forced into insolvency, though continued to run.
Dynegy6 July 2012EnergyAfter 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 27 July 2012Medical technologyIn 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.
Banco Espírito Santo 3 August 2014BankingAn 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 Smith5 January 2016RetailOn 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 and HSBC Bank Australia.
WirecardBanking, 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.

List of scandals without insolvency