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Liquidation and Dissolution Processes in Some HIH Companies

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Added on  2020-05-28

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This is the reason why ABC, OneTel, and HIH Insurance have been selected as these companies highlight the context wherein companies encountered liquidation because of major issues prevailing within them. This is the reason why ABC, OneTel, and HIH Insurance have been selected as these companies highlight the context wherein companies encountered liquidation because of major issues prevailing within them. Assessment OneTel Ltd is considered as the biggest telecommunication organization throughout Australia but because of improper corporate governance practices and heavy reliance on debt, the

Liquidation and Dissolution Processes in Some HIH Companies

   Added on 2020-05-28

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ABC, OneTel, and HIHExecutive summaryThe current situation of companies has raised many questions owing to the emergence of several issues. Further, various companies have also faced liquidation and dissolution processes as a result of increment in their liabilities and decline in assets. This is the reason why ABC, OneTel, and HIH Insurance have been selected as these companies highlight the context wherein companies encountered liquidation because of major issues prevailing withinthem. Moreover, the major reason behind their liquidation can be attributed to their incrementin liabilities in comparison to assets that interrupted their smooth flow of operations.1
Liquidation and Dissolution Processes in Some HIH Companies_1
ABC, OneTel, and HIHContentsIntroduction...........................................................................................................................................2Assessment............................................................................................................................................3Complications in reporting procedures.................................................................................................4i.HIH downfall..................................................................................................................................5ii.Downfall of OneTel........................................................................................................................6iii.Downfall of ABC Learning..............................................................................................................7Conclusion.............................................................................................................................................9References...........................................................................................................................................102
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ABC, OneTel, and HIHIntroductionIn Australia, many companies encountered issues that resulted into their liquidation processes. Few major companies in such scenario are ABC Learning, HIH Insurance, and OneTel Ltd. The reason behind liquidation of all these companies can be attributable to the fact that they faced crunch of financial resources after being overburdened by debt obligations. As a result, they failed to continue smooth flow of operations and besides, these companies also lacked proper corporate governance practices that resulted in their downfall. Overall, the increment in liabilities of the company was the prime reason why these companies failed to persist in the market and had to witness downfall (Manoharan, 2011). Hence, it is notable that heavy reliance on debt obligations must be strictly avoided by companies as it often results in creation of a heavy financial crunch that is difficult to be avoided. With the help of this report, prime importance will be exerted upon the liabilities that resulted in liquidation of all three companies.3
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ABC, OneTel, and HIHAssessmentOneTel Ltd is considered as the biggest telecommunication organization throughout Australiabut because of improper corporate governance practices and heavy reliance on debt, the company encountered liquidation processes. Such improper strategies and measures implemented by the company played a key role in its downfall. For example, the audit procedures undertaken were inappropriate in nature, internal control mechanisms were incomplete too, etc. Besides, when it comes to HIH Insurance Ltd, the company also witnessed a same scenario in the year 2001. Before such situation, HIH was also considered the biggest organization in its industry as it possessed a huge base of assets. However, in 2001, the company exerted mass reliance upon debt capital structure to finance its smooth flow of operations that resulted in its downfall, as the company became overburdened with debt obligations and such massive asset base also became insufficient to repay those. Moreover, it was also notable that inappropriate knowledge and interpretation of risks associated to businesses also played a role in the company’s liquidation (English et. al, 2013).Therefore, it can be observed that both such companies faced issues of liquidation as a result of high reliance on debt structure and improper corporate governance approaches. With this report, the exact complications will be accounted for a better understanding.4
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