America loves rags-to-riches stories, but tales of riches-to-rags can be always fascinating, too. Some were due to a series of bad investments, others to criminal activity. Some we've seen were due to terrible luck, terrible timing, or the emergence of a new service or technology that quickly rendered a dominant business obsolete. Here's a look at the most dramatic falls from riches and grace.
For much of the 1980s, all of the '90s, and into the 2000s, movie night in America started with a trip to Blockbuster. When Blockbuster emerged in the mid-'80s, the movie-rental chain annihilated countless mom-and-pop video stores across the country and at its peak in 1994, Blockbuster was valued at $8.4 billion. The arrival first of Redbox and Netflix, however, and later of digital media and streaming video, sealed Blockbuster's fate. It filed for Chapter 11 in 2010 to overcome about $1 billion in debt. Only one Blockbuster store remains, in Bend, Oregon.
With the exception of Charles Ponzi, Bernie Madoff is possibly the most notorious swindler in the history of corporate crime. He'was serving a 150-year prison sentence until his death in 2021. His $65 billion Ponzi scheme came crashing down in 2008, but it wasn't until April 2009 that federal agents began seizing his yachts and homes in the opening salvo of court-ordered seizures of his sprawling assets.
For generations of American kids, a visit to Toys "R" Us was a little slice of heaven. That all changed in 2017, however, when the chain filed for bankruptcy. The following year, it announced the closure of virtually every single one of its 800 stores. Toys "R" Us will attempt to restructure and rebrand, however, with 24 stores scheduled to open in 2024.
Related: 20 Famous Brands That Refused to Die
In the mid-2010s, Elizabeth Holmes was one of the fastest-rising stars in Silicon Valley with a net worth of $5 billion and the title of the youngest woman billionaire in the entire world. By 2018, her net worth was zero, and she was under investigation for fraud. Theranos, the company she started when she was just 19, promised to revolutionize the way patients are diagnosed and treated through a new type of blood test. Those tests, however, proved to be wildly inaccurate and investigative journalism soon revealed a massive web of fraud. She is currently in jail until 2032.
In the realm of 20th-century giants — or all companies in American history, for that matter — few had a longer run at or near the top of the hill than Sears. By the time it filed for bankruptcy in 2018, however, Sears was on life support. When it emerged from Chapter 11 the next year, the once-mighty Sears was operating just 400 stores, down from 1,000 a year before. That number then dwindled to 231, with the chain set to close completely this year.
Related: 25 Popular Stores That Could Soon Be Out of Business
In the 1980s and '90s, few names in the world of professional tennis rang out louder than that of Boris Becker, a six-time Grand Slam champion who remains one of the greatest players in the history of the sport. In 2017, London's High Court declared him bankrupt after he failed to pay millions of dollars in debt. In Great Britain, bankruptcy comes with severe restrictions on what you can borrow and spend, but those restrictions are usually lifted after one year. In 2019, however, it became known that Becker tried to hide millions of dollars in assets, and his status as bankrupt was extended for 12 years through 2031.
Macy's is one of the most storied retailers in American history, serving as an anchor tenant in nearly every major mall in America, as the backdrop for the movie "Miracle on 34th Street," and as the namesake sponsor of the country's biggest Thanksgiving parade. By 2016, however, Macy's was in such dire straits that it announced the closure of 100 locations as it let its retail leases expire. In the summer of 2019, a Macy's earnings report was so abysmal that it sent retail stocks crashing to a decade low.
Known as Catwoman in the tabloids for her excessive plastic surgery, socialite Jocelyn Wildenstein was rumored to spend $1 million a month in her prime. The wife of a late art mogul, Wildenstein engaged in reckless spending and piled up mountains of debt. By the time she declared bankruptcy in 2018, her assets were underwater, her checking account was empty, and she was living off of sub-$1,000 monthly Social Security payments.
No online seller is more feared and vilified by vanquished traditional retailers than Amazon — and Amazon started as an e-bookstore. By July 2011, the 40-year run enjoyed by Borders Books was at its end, with the bookselling giant collapsing and being sold off in pieces — 11,000 Borders employees were suddenly out of work. By September of that year, the last 400 Borders shut their doors.
Allen Stanford is an inmate in a high-security prison in Florida, where he will almost certainly spend the rest of his life after being sentenced to 110 years following 13 felony convictions in 2012. In 2009, federal agents raided his offices, which he used to carry out a certificate-of-deposit based $8 billion Ponzi scheme, the second-largest in history to only the fraud perpetrated by Bernie Madoff. Although Stanford was ordered to forfeit nearly $6 billion in cash, nearly all of it had been spent, and his victims recovered virtually none of their losses.
For the better part of a century, Barneys was an icon of New York City retail and the destination of well-heeled tourist shoppers from around the world. Rapidly rising rents and dwindling sales, however, became too much for the luxury brand to bear. In the summer of 2019, Barneys — which by then included stores in San Francisco and Beverly Hills, California, Seattle, Chicago, Las Vegas, and beyond — declared bankruptcy.
Energy tycoon Eike Batista was once the richest man in Brazil — and one of the richest in the world — thanks to a net worth of $30 billion. It all came crashing down, however, in 2013 when his OGX oil company declared bankruptcy. Batista's problems didn't stop there. Shortly after, he was sentenced to 30 years in prison for bribing a high Brazilian official.
There was a time when it seemed like there was a JCPenney in every mall and shopping center in America, but by July 2019, its stock had plummeted to less than $1 a share as the company prepared for bankruptcy or court-ordered restructuring. In a familiar theme, sales were slumping, customers were cutting out the middleman and buying directly from companies like Nike, and fashion disruptors like Zara were gobbling up a bigger and bigger piece of the pie.
Billionaire brewer Bjorgolfur Gudmundsson was once Iceland's second-richest man. He even owned his own soccer team. In 2009, however, he filed for bankruptcy protection claiming $759 million in debt, just another victim of the Great Recession-induced credit crunch that crippled Iceland's economy. Gudmundsson's reported net worth plummeted from $1.4 billion to zero.
Murray Energy was once the largest private coal company in America, but by 2019, it became yet another victim of a four-decade freefall in demand for coal in favor of cheaper and cleaner forms of fuel. President Donald Trump ran, in part, on bringing the coal industry back from the brink, but Murray Energy's fate was part of an unmistakable trend. More than 50 coal plants have closed since the 2016 election alone.
Investor Sean Quinn was the richest man in Ireland at one point, but he lost nearly all of his $2.8 billion fortune in a series of bad banking industry deals. When he declared bankruptcy in 2011, he claimed to have less than the equivalent of $65,000, but the bank said he owed more than the equivalent of $3.32 billion. Things got worse when he was charged with contempt for attempting to conceal assets.
In 2019, teenage clothing chain Forever 21 fell victim, like so many others before it, to the retail apocalypse that continues to gobble up giants of the shopping mall era that met their ends at the hands of e-commerce. There were 8,200 store closings in 2019 alone. Although it will continue to operate in Latin America, Forever 21's Chapter 11 restructuring included the closure of 178 stores in the U.S. and hundreds more overseas, including virtually all locations in Asia and Europe.
Guess was another trendy apparel chain that rose to prominence in the early 1980s and rode the mall craze wave to become a household retail name. Like so many others it shared mall space with, however, Guess was on life support by 2017. That year it closed 60 stores in the U.S. alone as shoppers abandoned 20th-century retail giants to purchase their threads online. More than a hundred more Guess stores were shuttered in the following months and years.
Vijay Mallya was a billionaire known for his hard-partying, extravagant lifestyle. When he defaulted on massive loans to banks in his native India, however, he used a diplomatic passport to flee to London, where he continues to face extradition. Today, he's bankrupt and his assets have been frozen around the world. An Indian court ruled that he owes 13 of the country's financial institutions the equivalent of nearly $1.5 billion.
In 2010, President Barack Obama famously toured a Solyndra solar panel manufacturing facility as part of his administration's push for clean energy. Just one year later in 2011, however, Solyndra had filed for bankruptcy and was scrambling to avoid a firesale. Despite its $700 million in venture capital funding and $535 million in federal loan guarantees, Solyndra couldn't withstand the avalanche of cheap Chinese imports that flooded the American solar panel market.
When she married John W. Kluge in 1981, Patricia Kluge's new husband's $5 billion net worth was enough to earn him the title of the richest man in America — and she was already a wealthy heiress and model. When they divorced a little less than a decade later, she got a settlement of $1 million a year, but that was small potatoes compared to the couple's legendary $100 million Albemarle estate, located near Thomas Jefferson's Monticello in Virginia, which she also walked away with in the divorce. Beginning in 1999, she and her new husband (Kluge was her second, she was his third wife) borrowed heavily against Albemarle and dumped tens of millions of dollars into a bold plan to build a massive winery, vineyard, and luxury housing operation. When the housing market crashed, they lost it all and declared bankruptcy in 2011.
Thomas Cook, a British global travel company, had 178 years of history before it came crashing down in a pile of corporate rubble. Massive debt, mismanagement, and political crisis in some of its key operating countries led the company to seek a $1 billion-plus bailout package from its shareholder firms, which it received — but even that was not enough. Its September 2019 collapse was swift — so swift, in fact, that hundreds of thousands of travelers were left stranded as all of the company's flights were simply canceled without warning. The British government was forced to commission dozens of jets to rescue its stranded citizens from all over the world, and 22,000 people lost their jobs.
Aubrey McClendon died in a fiery car crash in 2016 — it was a tragic end to what was already shaping up to be a downward spiral with little chance of a happy ending for the energy titan. Just one day earlier, McClendon, the man who was largely responsible for America’s fracking boom, was indicted by the federal government for allegedly rigging oil and gas bids. Before that, he was ousted by his first company after it emerged that he had misused more than $1 billion in loans, squandered company resources to support a lavish lifestyle, and engaged in shady side deals.
In the late 2000s, American Apparel was flying high at its historic peak of 281 locations, but by 2017, that number had dwindled to just 110 stores. Even that, however, proved too much to maintain. Once a leader in the retail industry, American Apparel announced that year that it was closing all 110 remaining locations and declaring bankruptcy for the second time. Whatever was left was gobbled up by Canadian retailer Gildan Activewear.
Another riches-to-rags tale came to a tragic end when billionaire German business magnate Adolf Merckle committed suicide in 2009 — just one year earlier he was one of the 100 richest people in the world. That year, however, was the start of the Great Recession, and Merckle's family business empire was poised to come crashing down after Merckle bet the farm on the wrong horse in the form of a terrible gamble against rapidly rising Volkswagen shares.
