2023: The year of big bankruptcies

This year has seen a number of big and quite unexpected bankruptcies with the number at its highest level in the second quarter (Q2) of 2023 since 2015.

The bankruptcies ranged from companies in retail, jewellery, bakeries, books, pharmaceuticals, cryptocurrency, banks and more. 

Although some of the largest busts took place across the pond in the US, such as the Silicon Valley Bank and FTX, Europe also witnessed its fair share of companies closing their doors.

Amongst them, hardware retail chain Wilko was arguably one of the better-known. Back in January, the company had borrowed a massive £40 million from Hilco Capital, a restructuring firm. In February, Wilko announced that it was slashing 400 jobs, with the company finally revealing that it was going into administration in August.

The bankruptcy took 12,000 jobs and 400 stores down with it. Wilko ended up in about £625 million of debt – and not even the founding Wilkinson family’s multi-million pound fortune could act as a safety net.

Ultimately, the collapse was blamed on Wilko for not being quick enough to cut poorly-performing products, as well as declining furlough support while still being open during the COVID-19 pandemic. The company was also accused of borrowing too much, too fast, without taking the time to create a thorough cost-cutting plan, or expand its online arm.

However, other retail chains such as Poundland, B&M and The Range have since swooped in to acquire the Wilko brand, as well as some of its stores. They have also pledged to recruit a portion of the laid-off staff and revive Wilko’s online business.

Belgium bakery-restaurant chain, Le Pain Quotidien, also announced the insolvency of its UK division in July 2023. Since then, the chain has closed almost all of its UK branches, except isolated ones such as in St. Pancras station.

Following filing for insolvency for its Belgian and US branches back in 2020, the company has struck a deal with Aurify Brands, to take over its US locations, with the latter agreeing to re-establish about 1,000 jobs, by reopening at least 35 bakeries.

The bakery was hard-hit by the pandemic, with footfall plunging drastically, especially as the cost of living and inflation soared. Higher rents, as well as labour costs also further eroded flagging profit margins.

Stationery chain Paperchase also keeled over back in February, following a rough couple of years due to rapid changes in ownership, and threatening about 1,000 jobs. The brand was quickly taken over by Tesco, which still continues to stock much of its merchandise, but a large number of Paperchase’s stores still had to shut down.

Paperchase suffered from classic overexpansion, having about 160 stores at its peak. It also faced increasingly cut-throat competition from other stationery players such as Flying Tiger, Smiggle, Card Factory and the Works, as well as retailers such as John Lewis.

Online book seller Book Depository, holding what some would consider the world’s largest collection of English second-hand books, also shut its doors in April 2023. This was following major changes by Amazon, the company’s parent company regarding cutting their book department costs.

This came on the heels of Amazon announcing a total of about 27,000 job cuts, spread out across January and March 2023, across the company. These reductions hit the books and devices departments especially hard.

Frozen foods supermarket chain Iceland also announced the closing of its Ireland branch in June. This was following the operator of the Ireland branch, Metron Stores, filing for bankruptcy, with a debt of about €36 million.

Iceland Ireland has also suffered a severe blow following the recalling of several of its animal-based products, such as meat, chicken, eggs, fish and daily, due to suspicions about their origin.

Iceland has also been heavily criticised for the way it has handled its Ireland closing, in some cases giving no notice to employees about their layoffs. This has led to several workers turning up for work and finding stores shut with no information about what had happened.

UK tile company Tile Giant opted for a pre-pack administration deal in February, before insolvency practitioners were appointed. 13 stores were shut, with about 43 jobs being cut following the deal, which mostly happened due to the company needing more funding than was initially anticipated.

Upmarket jewellery retailer Vashi announced insolvency in April, following a winding-up notice by Canary Wharf, where it was based, which also affected several other City giants such as Allen and Overy.

Several prominent City business people had poured in tens of millions of dollars into the company, which had four stores and about 200 employees. These investors included shirt-maker Charles Tyrwhitt founder Nick Wheeler, Sinclair Beecham, co-founder of Pret a Manger – and Willam Jackson, CEO of Bridgepoint, a private equity firm.

Following the closing, more questions have been raised about Vashi’s financial governance and oversight.

In September, ethical fashion brand People Tree announced that it would be liquidating its UK branch, following debts climbing up to approximately £8.3 million. The company owed hundreds of thousands of pounds to investors such as Oikocredit and Shared interest, as well as major suppliers in India.

Although setting high standards in ethical trading and ethnic crafts, the company has been unable to pay several staff salaries since July, finally moving to make a large portion of staff redundant since August.