Bankruptcy: Creusot-Loire Goes Under

The Paris commercial court last week ordered the liquidation of Creusot-Loire, France’s largest privately owned engineering conglomerate. The group’s companies, which had amassed losses of more than $220 million in the past two years, had run up debts of more than $633 million. The failure was the biggest industrial bankruptcy in French history.

Creusot-Loire was created in 1970 by the merger of three steel and engineering groups. In 1980 Harvard-educated Didier Pineau-Valencienne took over as chairman and sought to streamline the company’s operations. To no avail. In 1983 the group racked up record losses of $200 million.

After two reorganization plans failed to revive the firm’s sagging fortunes, Pineau-Valencienne in March demanded a new $277 million aid package from the government of Socialist President François Mitterrand. Talks over a new salvage operation got nowhere. The Ministry of Industry accused Pineau-Valencienne of refusing to accept a “reasonable” blueprint, while the Creusot-Loire chairman charged that the government was trying to seize control of the company.