The 1987 stockmarket crash was just the start of the pain for many business people who lost everything, including their marriages, recalls management consultant John Rofe.

An accountant who specialised in company turnarounds, Rofe was hired by the Ministry of Justice in 1989 to help it deal with the spike in business failures that needed to be reviewed and processed.

He dealt with 55 companies that had collapsed in the wake of the crash, including shareholders and directors.

Most were private companies that could not survive the fallout from the crash.


"I surveyed the impact and found that 82 per cent of the principal shareholders lost everything," he said. "That's the house and car and of the ones that were married 57 per cent lost the marriage."

The market crash was just the start.

"People think about shareholders having been hurt at the time of the crash but there was a hell of a lot of people hurt in the following five years. It wasn't just that we went from an environment of excess to an environment of deleveraging ... it was that the deleveraging took a lot of time."

Rofe recalled the boat-building industry collapsing immediately in the wake of the crash, and that failures then spread through the business community as confidence dried up and the banks froze lending.

"By 1989 they [the ministry] were swamped. They got me to look at the causes of failure of the businesses," he said. "The people in the commercial affairs department were quite shell-shocked because they were dealing with people who all had their own trauma."

"Banks were splitting their accounts up into bad bank and good bank and if you got your account put with the bad bank then you were given very little time to sort your affairs out before they lowered the boom on you."

For employees that meant redundancy and unemployment, which spiked from 4 per cent to 11 per cent between 1987 and 1991.

But at least those people had a safety net, Rofe said. Directors in companies did not have that.

Despite the negative image most were just people who got caught out.

"Shareholders universally blamed the leadership of the companies but when you actually did an investigation of the bad guys and what they did wrong, the only time they did naughty things was typically when they tried to save the business," he said.

"When instead they should have stepped back and admitted insolvency. People put good money after bad so by the time their companies went bust all of their assets were in it."

In Rofe's experience just 2 per cent were actually crooks.

"The rest were just, 'there but for the grace of god' type thing. People were going from being very wealthy to having nothing. They were really very desperate."

Suicide was not uncommon.

"They'd get to a stage where they just couldn't see the way ahead."