Jeremy Bates lost the battle of the Davis Cup captains as he fell to a narrow defeat to Thomas Muster. The British captain went down 7-5 7-5 as the Austrian won four games in a row to seal his win at the Albert Hall.
John McEnroe lost 7-6 (7-5) 4-6 10-2 to Sergi Bruguera, having only arrived in London 12 hours before his match began.
A knee injury has forced Mats Wilander out of the event, meaning Anders Jarryd and Jim Courier, last year's winner, go through to Friday's quarter-finals.
Bates must wait until Thursday's match between Muster and Paul Haarhuis to see which two of the three of them in the group will follow Jarryd and Courier into the last eight.
Frenchman Henri Leconte became the first player eliminated from the tournament when he went down 6-3 6-4 to tournament debutant Cedric Pioline.