The UK’s relentless slide into recession wrought havoc on the corporate landscape over the past year, with company casualties piling high.
High street names Woolworths and MFI were among more than 3,000 UK firms that have collapsed into administration so far this year as they buckled under the pressure of soaring costs, falling consumer spending and the credit crunch.
But the year may be remembered for one company failure in particular – the demise of US investment banking giant Lehman Brothers.
The group represents one of the biggest company failures in living memory and certainly the most complicated to sort out, according to administrators PricewaterhouseCoopers (PwC).
PwC said at a creditors meeting last month that the administration would be “ten times as large and more complicated” than dealing with the bankruptcy of multi-national Enron Corporation.
It is thought that the process could take seven years to complete, with an estimated 11,000 or more creditors and some 5,000 staff affected.
Mike Jervis, one of the four PwC partners called in at Lehman’s, said only 1,000 staff had been retained at the bank as it winds-up the group.
One thousand were made redundant, 500 left for other jobs and 2,500 were transferred to Nomura after it bought the bulk of Lehman’s operations.
Thousands more, however, have lost their jobs as UK administrations mount, with customers and suppliers and a host of creditors also left to queue up for money owed.
Around 22,000 permanent jobs will go at Woolworths after administrators failed to find a buyer for the ailing retailer as a going concern, Meanwhile, 1,350 more have been made redundant at MFI after the stricken furniture chain called in administrators.
It collapsed just hours after Woolworths confirmed it had gone into administration.
As well as Woolies, MFI and Lehman, corporate casualties in 2008 included:
* Wrapit – August 4. The wedding gift firm was one of the year’s first high profile administrations. Thousands of distraught couples were left chasing up undelivered presents and embarrassingly forced to ask guests to seek compensation after Wrapit ceased trading in the summer.
Administrators were unable to find a buyer for the firm, leaving tens of thousands of customers as unsecured creditors.
* Rosebys –- September 25. The curtains and home furnishings chain went through a painful sale and break-up process after it was placed into administration in September. The 86-year-old firm became a victim of the UK property slump and high street spending squeeze.
Rosebys was acquired by India-based textiles firm GHCL in July 2006 as a springboard for developing a retailing presence in the UK. But in the year to March 31, Rosebys made losses of £6 million and remained in the red since then. It owed trade creditors about £11.7 million and inter ompany creditors £19 million at the time of its administration.
* Ethel Austin – April. The discount fashion group was given a second chance this year after the bulk of the group was bought out of administration. The 74-year-old brand has remained intact, but it suffered a close call after being put into administration in April amid tough high street trading conditions and competition from rival budget chains such as Primark and Matalan and the big supermarkets.
Silverjet – May 30. The business class only airline was brought to its knees by the oil price bubble earlier this year and the last minute failure of a rescue deal. About 7,000 UK and 2,500 non-UK passengers were affected when it was forced to suspend services and placed into administration at the end of May.
The Luton-based carrier’s demise came just over a year after it launched. Silverjet – founded by Lawrence Hunt – was crippled by soaring fuel costs and tougher market conditions, which left it with a funding shortfall.
XL Leisure – September 12. Tens of thousands of holidaymakers were left stranded when the UK’s third largest tour operator collapsed in the face of record oil prices and a worsening economy. The Civil Aviation Authority (CAA) was left to sort out a mammoth mess after XL went under, with 85,000 passengers marooned overseas, while many thousands more had bookings with the firm that they had to try and reclaim.
Administrators Zolfo Cooper were brought in to wind up the firm, which had a number of subsidiaries, including the XL package holiday firm, XL Airlines, the Really Great Holiday Company and Excel Aviation.
It is thought that XL had total debts of £400 million when it went into administration, with a recent Zolfo Cooper report reportedly stating that 280 million US dollar (£188 million) of that was due to a management buyout completed in December 2006.