Maxwell Communications Corporation was a leading British media company. it was listed on the london stock exchange and was a constituent of the Ftse 100 index. the company was estab-lished in 1964 as the British printing Corporation. in 1967 it acquired a majority stake in Haymarket Group. in july 1981 robert Maxwell launched a dawn raid on the company acquiring a stake of 29 per cent. in 1982 he secured full control over the company and changed the name of the Company to British printing & Communications Corporation and to Maxwell Communications Corporation in october 1987. the company acquired Macmillan publishers, a large us publisher, in 1988 and science research associates and the official airline Guide later that year. By the end of the 1980s the Maxwell empire, comprising more than 400 companies was loosely organized into three clusters. the two publicly listed companies: the Mirror Group, which published the Daily record, the sunday Mail and racing times, as well as the Mirror newspapers; Maxwell Communication, the flagship company which controlled such concerns as Macmillan books, the official airline Guides and p.F. Collier encyclopedias; and the Robert Maxwell Group which was privately held and owned 100 per cent by the family whose operations included the oxford united Football Club and publications like the european, as well as stakes in newspapers in israel, Hungary and Kenya. all the three holding companies were also directly and indirectly linked to dozens of other family-controlled enterprises.

Debacle of Maxwell

in november 1991, chairman of the group companies robert Maxwell, 68, was found drowned floating beside his luxury yacht near the Canary islands. in a matter of weeks of the mysterious death of Maxwell, the global empire of publishing and other businesses collapsed amidst scandal about shocking financial maneuvers. investigations revealed that Maxwells group companies owed2.8 billion to its bankers. Maxwells untimely death triggered a flood of instability with banks frantically calling in their massive loans. His two young sons Kevin and ian struggled to hold the empire together, but were unable to prevent its collapse. Furthermore, the most famous uK pension scandal of all time came to light when 530 million hole in the pension funds of 16,000 employees of Mirror Group newspapers was discovered. the thousands of employees of the Mirror Group had paid into pension funds totalling many millions of pounds, which Maxwell had borrowed in a desperate attempt to prop up the ailing Maxwell Communication. the Company went into administration following the death of robert Maxwell. its properties were sold to various media companies. the london based Maxwell Communication Corporation- parent of the giant u.s. book publisher Macmillan also filed the Chapter 11 bankruptcy petition in new York, in part, because bulk of its revenue and operating profit was generated in the united states. the Maxwell case was one of the most important transnational insolvencies of modern times. the empire of Maxwell was an unusual one with its true seat in london, where it was administered and nearly all of its financial affairs (especially loans and the grant of security) were managed, but its principal assets were in the united states in the form of various large operating companies. this ambiguous structure gave rise to a double-headed proceeding: an administration in the united Kingdom and a Chapter 11 bankruptcy in the united states.

Reasons of the Debacle

(1) Acquisitions through Heavy Debts. Maxwell was in deep debts following large acquisitions. the borrowings were personal as well on company accounts. the company borrowed $3 bil-lion in 1988 to buy the us publishers Macmillan and official airlines Guide. in fact, Maxwell wanted to buy everything from american book publishers to British soccer teams to israeli and German newspapers. He piled debt upon debt by pledging the assets of the companies under his control. it was discovered later that Maxwell had pledged the same assets as collateral for various loans.

(2) Financial Difficulties and Diversion of Funds. By the end of the 1980s the Maxwell empire, comprising more than 400 companies, was experiencing acute financial difficulties and was only kept afloat by shifting funds around his maze of inter-locking private companies, misap-propriating pensioners funds, and relentless deal-making. Months before Maxwell vanished from his yacht, there was a growing fear that he was having trouble meeting his repayment schedule. With the american and european economies starting to sour, Maxwell was faced with declining cash flow and debilitating debt payments. Despite his eroding financial condition, however, he was able to pass annual audits by leading european accountants Coopers & ly-brand Deloitte. that enabled Maxwell to add on more debt in March 1991 when he purchased the Daily news from the tribune Co. by assuming as much as $35 million in obligations. in 1991, desperate for money, Maxwell sold pergamon and floated Mirror Group newspapers as a public company. But it was too late.

(3) Uncertainties following the Death of Maxwell. the stock of Maxwell Communication plunged to $2.18 on 5 november 1991, (the day Maxwell disappeared) from a high of $4.28 a share in april 1991, and further dropped to $0.63. the decline in stock value was of special concern to Maxwells creditors, since most of the familys 68 per cent stake in the company was pledged as collateral for loans. the untimely death of Maxwell triggered a wave of uncertainty amongst the lenders and creditors which ultimately led to the collapse of the empire of robert Maxwell based around Maxwell Communications Corporation.

From the early 1990s, there has been a growing awareness of the relevance of positive leadership in corporate governance for the sustainability of companies and the business system. This awareness stems from manifest failures in corporate governance, which gave rise to scandals worldwide, and arguably, to the global banking crisis of 2008. An early scandal, which was a factor initiating corporate governance reform in the UK, was the 1991Maxwell downfall, when it was revealed that Robert Maxwell, Chairman and CEO of MaXINell Communications Corporation, had caused a GBP 441 million-sized hole in the company pension fund to cover hidden personal debts of GBP 4 billion. Subsequent analysis highlighted a number of corporate governance deficiencies and lack of accountability and controls because of the concentration of power that had facilitated MaXINell's fraudulent activities.

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