Going into business is often an ambitious move, for someone who is prepared to take risks. Even when you get to the top, or at least have made a name for yourself, things can still go wrong, whether it’s the external impact of a financial crisis or changing consumer demands, or internal problems with corruption or mismanagement.
Throughout history, we have seen businesses that have ended up bankrupt, or being sold for cash; many of the businesses falling into this category over recent years have been in the financial industry, which has suffered following the financial crisis of 2008. This list contains 10 of the most dramatic business disasters from past and present.
10. South Sea Company
Back in the day, it was much easier to deceive the stock market. That was what happened after Britain signed the Treaty of Utrecht with Spain to bring the Spanish War of Succession to an end in the early 18th century. The South Sea Company was ostensibly set up to conduct trade in South America with Spain, but the reality was that virtually no trade was taking place.
9. Allied Crude Vegetable Oil Refining Company
The collapse of this company in November 1963, was part of one of the biggest scandals to that point in history to hit the New York stock exchange. Anthony de Angelis had founded the company in the 1950s to take advantage of opportunities to sell vegetable oil and other products to Europe at low cost. When the extent of the swindle was uncovered, it became clear that De Angelis had systematically provided false numbers on the amount of oil he controlled.
8. Long-Term Capital Management
The Asian crisis of 1997-98 was presented to begin with as a problem only for that region of the world, as growth rates fell and currency values dropped in places like Thailand and Indonesia. But shortly afterwards, it became an international issue when the Russian government defaulted and Long Term Capital collapsed in 1998.
The demise of Enron provided an example of one of the largest scale frauds in US corporate history. The energy firm had portrayed itself as a modernizing utility corporation able to compete in the market. However, it did so by systematically falsifying its accounts, and concealing its financial dealings and losses through the use of shell companies and non-existent partnerships.
The major telecommunications firm, which at one time was the second largest in the US, collapsed amid corrupt dealings and false accounting practices in 2002. For three years prior to that, the company’s accounts had been deliberately falsified in order to prevent the stock price from falling. The bankruptcy proceedings were heard by the same judge overseeing the Enron case.
5. Northern Rock
A candidate for the title of the British Bear Sterns, the fall of Northern Rock was the signal for the economic crisis to hit the UK. The company had provided mortgages to householders and also ran savings accounts. As savers queued up outside branches to obtain their money, it suddenly became clear that the firm lacked the financial resources to cope.
4. Bear Stearns
The failure of the investment bank in March 2008, was one of the early indications that all was not well in the financial world. The bank was active above all in the securities market, an area that triggered the sub-prime mortgage crisis. In a desperate attempt to save the bank, the fifth largest investment bank at the time in the US, the Federal Reserve of New York provided it with an emergency loan arranged together with JP Morgan.
Documentary about Bear Stearns desaster
3. Washington Mutual
Anyone who thought Lehman Brothers was the worst of all the crisis was in for quite a shock. Less than two weeks later, Washington Mutual became the largest bank failure in US history. On September 25th, 2008, WaMu bank was seized to prevent its quickly mounting losses. Over the proceeding weeks, a total of $16 billion in deposits had been withdrawn from the bank.
In a matter of ten years, Blockbuster went from virtually controlling the rental market in 2000, to filing for bankruptcy in 2010, leading to the closure of its stores and loss of thousands of jobs. The big change that had occurred was the huge advances in the internet that enabled individuals at home to stream films and other content online.
The incredible technological developments that accompanied the emergence of mobile phones in the 1990s were led by Nokia in many areas. But it failed to keep up with the competition, particularly as other companies proved able to produce more advanced products at a fraction of the production cost. Eventually, it was bought by Microsoft which later announced that it would discontinue use of the Nokia brand.