When software companies go wrong, they tend to go spectacularly wrong.

Torex Retail - which has gone into administration and its assets into the hands of private equity - had its own problems. Not least the “breathtaking corporate governance and financial issues”, cited by Steve Marshall, the former Railtrack and Queens Moat Houses boss who was brought in to sort the mess out.

But what else stands out from today’s grim sign-off statement to the stockmarket is the small extent to which Torex’s 2006 sales had fallen short of City forecasts: some £246 million, only 12 per cent shy of the expected £280 million.

For software companies, whose high fixed costs make them extremely operationally geared, a small miss in sales translates into a massive hole in profits. Here, that shortfall meant Torex only made £4 million last year, against a consensus pre-tax profit forecast of £48 million.

Where that miss becomes toxic is when, as in the case of Torex, a company is heavily indebted: a profit warning becomes in effect a balance sheet warning. Add in a strategy of vigorous acquisition - which had made it harder for management to get a handle on the underlying businesses - and it is not hard to see how Torex unravelled in the same way that Cedar Group and iSoft did before it.

But what is astonishing is the speed of Torex’s demise. Its shares were suspended in January, only six months after raising £65 million in a convertible bond issue, the largest ever such financing on AIM.

That bondholders should be wiped out alongside shareholders so quickly has set another record, although one of which London's junior stockmarket is likely to be less proud.

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