Wellbore failure can occur at different stages of operations. For example, wellbore collapse might happen during drilling and/or during production. The drilling process results in the removal of an already stressed rock material. If the induced stresses near the wellbore exceed the strength of rock, wellbore failure occurs. The production process also changes the effective stresses around the wellbore. Such changes in stresses can be significant for high drawdown pressures and can trigger wellbore failure. In this paper, the Mohr–Coulomb failure criterion with a hyperbolic hardening is used. The model parameters are identified from triaxial compression tests. The numerical simulations of laboratory tests showed that the model can reproduce the mechanical behaviour of sandstone. In addition, the simulations of multilateral junction stability experiments showed that the model was able to reproduce yielding and failure at the multilateral junction for different levels of applied stresses. Finally, a numerical example examining multilateral junction stability in an open borehole during drilling and production is presented. The results illustrate the development of a localized failure zone proximate to the area where two wellbore tracks join, particularly on the side with a sharp approaching angle, which would significantly increase the risk of wellbore collapse at the junction.