R ARELY CAN a stock price have collapsed so spectacularly. Just an hour or so after Interserve confirmed on December 10th that it was in talks with its lenders about a rescue plan, the company’s shares had dived by 75%. At one pointed they touched a measly 6p (8 cents), giving one of Britain’s biggest outsourcing companies a value of just under £10m. As Interserve has debts of over £500m, it is easy to see why investors are spooked. The company says it will announce its restructuring plans in early 2019, but some doubt that it can stagger on to see in the new year.

Interserve employs 75,000 people worldwide, including 45,000 in Britain. Just four years ago its shares were worth more than £7. Its fall reflects the humbling of an entire sector. Britain led the world in government outsourcing, whereby public services are contracted out to private companies. But the corporate giants that do this work have been beset by mounting losses and profit warnings. In January Carillion, one of the biggest, went bust.

At that point Interserve, which issued its first profit warning in May 2016, was already high on the worry list. The fear now is of another Carillion-style disaster. The consequences could be terrible. According to Tussell, a consultancy that scrutinises public procurement, Interserve has 51 government contracts, worth £2.1bn. The biggest is with the Ministry of Justice; Interserve is the largest provider of probation and rehabilitation services in England and Wales, in charge of 40,000 offenders. The company also has contracts with London’s fire brigade and police force.

Like all outsourcers, Interserve has suffered from taking on low-margin contracts. To expand their business, bosses bid low for work that ended up being unprofitable. Like Carillion, Interserve also strayed into areas where it had no expertise. It has lost a lot of money on projects supposed to generate energy from waste, after glitches in untested technology led to delays and cost overruns.

Interserve and Carillion have much in common. But the Carillion debacle, which cost taxpayers some £150m, has made the government take steps to minimise its losses if another outsourcer goes under.

Whereas Carillion continued to be given large contracts even as it wobbled, the government seems to have been reducing its exposure to Interserve. According to Tussell, in the 12 months to September Interserve won £250m less in new public-sector contracts than in the previous year, unlike other outsourcers like Capita and G4S , which increased their business. Still, ministers have stopped short of banning the company from bidding for further business, as the Labour Party demands, for fear of delivering the coup de grâce to a firm that relies on the government for 70% of its revenues. The Cabinet Office thinks Interserve is in better shape than Carillion was. On December 10th it won a £25m construction project from the Welsh government.

The government has also been working with the firm to ensure that its work can be swiftly transferred to others if it goes bust. Mournfully, this is known as a “living will”. The company hopes it will never be needed—and so must taxpayers.