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Study on the Liquidation of Companies- Project Report

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Added on  2019-11-26

Study on the Liquidation of Companies- Project Report

   Added on 2019-11-26

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PROFESSIONALACCOUNTING
Study on the Liquidation of Companies- Project Report_1
ABC, HIH & One.TelExecutive summarySeveral cases have taken place in the recent scenario that has generated dubiousness in the affairsof companies. Besides, many companies have been liquidated because of maximization of liabilities in comparison to assets. OneTel, HIH Insurance, etc are some of the instances that shedlight into this context wherein liquidation occurred as a result of complications encountered by these companies. Nevertheless, this report intends to highlight the complexities faced by both these companies that resulted in their liquidation as a whole. The major underlying cause behind their liquidation can be attributed to their increment in liabilities in a way that assets became inadequate to address every obligation.2
Study on the Liquidation of Companies- Project Report_2
ABC, HIH & One.TelIntroductionWith the due passage of time there has been major liquidation of companies in Australia. The major among them are HIH Insurance, OneTel and ABC learning. The notable differences among all the three have been the liquidity crunch owing to a huge burden of debt and a complete disturbance in the ethics. The liquidity crunch together with the improper governance played a leading role in the liquidation. In short, it can be said that liabilities was the major factorthat led to the downfall of all the companies. It needs to be noted that when the debt of the company stretches over a particular limit then the business faces immense problem. Moreover, if the business does not have proper liquidity to meet the obligations then liquidation is bound to happen. In the report below, the major highlight of study will be on liabilities that led to the liquidation of the companies. 3
Study on the Liquidation of Companies- Project Report_3
ABC, HIH & One.TelAnalysisOneTel is one of the largest telecommunication companies based in Australia that encountered liquidation owing to improper measures and ineffective developments throughout its operations. Furthermore, the company also failed to implement effective corporate governance strategies into its affairs that enhanced more of its complications. For instance, internal control mechanisms, inefficient audit processes, etc are some of the inefficacies that prevailed within thecompany’s operations that resulted in its downfall. HIH Insurance Ltd encountered the same situation in the year 2001 even though it was considered as one of the biggest companies that hada massive base of assets. In the year 2001, owing to maximized liabilities and debts, the company failed to repay its obligations with its base of assets, as it was immensely burdened by such obligations. Besides, it was also observed that because of inadequate knowledge and interpretation in association with business risks, the company failed to sustain in the market. Other issues like improper managerial practices, fraud, etc also played a role in degrading the company’s position (Heeler, 2009).Thus, both these companies encountered liability issues that were the major reason behind their downfall. With the help of this report, the exact complexities have been discussed for a better understanding of this context.4
Study on the Liquidation of Companies- Project Report_4

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