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Thomas Cook's failure has left half a million people stranded abroad. Here are 9 of the worst company collapses in history.
Thomas Cook's failure has left half a million people stranded abroad. Here are 9 of the worst company collapses in history.
Allana AkhtarSep 24, 2019, 00:32 IST
NICHOLAS ROBERTS/AFP/Getty Images
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Thomas Cook's bankruptcy - which stranded 600,000 passengers and ruined travel plans - is just one example of disastrous company collapses.
Lehman Brothers' collapse wrecked the global economy and sunk the stock market. The Enron scandal showcased the lengths corporate financiers would go to defraud investors.
Here are 9 examples of harrowing corporate bankruptcies throughout world history.
After a disastrous bankruptcy, British-based travel company Thomas Cook's collapse has left 600,000 people stranded across the world.
A Thomas Cook flight attendant said she found out she lost her job via Facebook. One man reported that a Tunisian resort was "holding travelers hostage" until they pay the money it said it was owed by Thomas Cook.
While corporate bankruptcies are often chaotic for employees and executives, the world's worst company collapses have shaken up entire world markets.
Lehman Brothers' collapse helped push the global economy toward the financial crisis. Pan American World Airways' bankruptcy shattered an global symbol of American travel. The Enron scandal showcased the lengths some corporate financers would go to defraud investors.
Earlier collapses -like the Medici Bank and the South Sea Company - became markers of their eras.
Here are 9 of world's worst corporate downfalls of all time:
1494: The Medici Bank, longtime money holder for the Vatican, collapsed due to ineffective leaders and tenuous cash reserves.
The bank was once one of the largest and most powerful financial institutions in Renaissance Europe, according to Business Insider's Áine Cain.
Over half of the bank's revenue originated from the Pope until 1434, and the bank's profitability allowed the famed Medici family to unofficially seize control of the Republic of Florence.
Yet the bank eventually overstretched its investments and its influence began to wane. Later corrupt episodes included defrauding a charitable fund devoted toward dowry payments.
1853: England's South Sea Company eventually failed after causing an economic collapse in the 18th century.
South Sea Company, which sold slaves and goods to Spanish colonies in the Americas, began in 1711 as a way to manage national debt. Many naive or first-time investors poured money into the company, leading to the "South Sea Bubble," author Helen Paul told Business Insider's Áine Cain.
Many company executives engaged in insider trading and bribery. The South Sea Company's dealings led to a wide-spread economic collapse that cost famed scientist Isaac Newton a fortune.
1911: The Supreme Court ordered John D. Rockefeller's Standard Oil to be broken up, dissolving one of the largest US monopolies.
John D. Rockefeller founded Standard Oil in 1870, and the company eventually controlled 90% of the country's oil refining business. Rockefeller became America's first billionaire.
The Supreme Court eventually ruled that Standard Oil violated the Sherman Antitrust Act and split it into 34 companies. The decision led to an end of the American Gilded Age, with trust busting shifting power away from robber barons.
1983: The holding company Carrian filed the largest bankruptcy in Hong Kong history. The collapse was due to one of the largest accounting frauds in history, and led to a dramatic investigation including the murder of an auditor and suicide of the firm's advisor.
George Tan Soon-gin, ex-chairman of the Carrian Group, took over the company in 1979 and built it into a billion-dollar empire in just 2 years.
Carrian Investments went bankrupt in 1983 after it couldn't repay its $1 billion in debt after a downtown in Hong Kong's property market.
In the aftermath of the bankruptcy, a Malaysian businessman murdered an auditor who was investigating Carrian's shoddy lending. During his trial, he accused Tan of ordering the killing.
A year later, Tan's lawyers successfully "outmaneuvered" government prosecutors to get him acquitted on fraud charges and free on bail, The Wall Street Journal reported.
1991: Pan American World Airways, once the world's largest international air carrier, shuts down.
Pan Am, once an iconic American brand known for its iconic flight attendant uniforms and luxurious travel, shut down as a result of decreased travel during the weak economy, rising fuel costs after the Persian Gulf crisis, and a terrorist attack in Scotland two years earlier that killed 270 people.
The shutdown led to a loss of 7,500 jobs in the US. Once the airline that "led America into the jet age in the 1950s," its downfall resulted in the collapse of a symbol of American business, the Los Angeles Times observed.
1997: Woolworths announces it would close 400 stores in the US, leading to 9,200 jobs lost.
The mass market retailer in US and the UK devised the early concept for "dollar stores" that encouraged people to come in and browse even if they didn't need something.
Yet the chain expanded too quickly — opening a store every 17 days in the UK during the 1920s. The expansion led to its demise, as the company suffered from operating losses of $24 million in 1997. That year, Woolworths eventually closed its remaining 400 stores in the US after years of store closures, and its UK arm eventually became part of Kingfisher.
2001: Enron, a Texas-based energy company, filed for bankruptcy after years of corporate fraud and corruption.
Once the country's largest energy providers, Enron executives hid billions of dollars in company debt by manipulating financial models and lying to investors. Thousands of employees lost their jobs and retirement savings.
In 2006, a Houston-based jury convicted CEO Jeffrey Skilling for conspiracy, securities fraud, insider trading and lying to auditors. He had been sentenced to 24 years in prison, yet was released earlier this year after 13 years in jail.
2008: Lehman Brothers filed for Chapter 11 bankruptcy, ushering in the Great Recession.
After its involvement in the subprime mortgage lending crisis, Lehman Brothers' top executives left and the then-fourth largest investment bank filed for bankruptcy. The fall remains the largest bankruptcy by asset value.
After the collapse, the Dow dropped 500 points in one day. For only the second time in history, a money market fund — considered safe haven investments — reports share value below $1. More than 2.6 million Americans lost their jobs by the end of the year.
While the Fed saved insurance giant AIG from bankruptcy and spent a total of $2.25 trillion on other bailouts, Lehman Brothers never recovered. Former CEO Dick Fuld, known as the "villain" of Wall Street, now gives investment advice to high-net-worth clients.
2019: British travel company Thomas Cook announced bankruptcy, leaving 600,000 passengers stranded across the world.
The 178-year-old travel company announced bankruptcy on Monday after failing to secure £200 million, or about $249 million, in emergency funding to its lenders.
The bankruptcy led to global chaos for Thomas Cook passengers, a staggering 600,000 of which were left stranded. Employees found out they lost their jobs via social media, $40,000 wedding plans went up in flames, and one man reported being "held hostage" in a Tunisian resort until he paid Thomas Cook's debt to the hotel.
