Exploring the Consequences of Insufficient Corporate Administration

The paper discusses the reasons behind the liquidation of three companies: ABC Learning Company, HIH Insurance Company, and One Tel Phone Company. The common factors contributing to their downfall include inadequate administration of liabilities, poor financial management, and lack of capital to pay off debts. ABC Learning Company's over-reliance on debt and erratic charges led to its downfall, while HIH Insurance Company's failure to manage modifying economic situations increased its liabilities. One Tel Phone Company's rapidly increasing costs and liabilities ultimately led to its collapse. The paper recommends that companies facing similar circumstances should consider lender negotiations, settlement sums or payment plans, securing assets, and considering business or asset sales to avoid liquidation.

Running head: LIQUIDATION OF COMPANIES
Factors Resulting in Liquidation of Companies
Name of the University:
Name of the Student:
Authors Note:

LIQUIDATION OF COMPANIES 1
Executive Summary
The goal of the paper is to uncover the purpose behind which a few organizations went into
liquidation. Through taking cases of the chose organizations those are very much distributed, for
example, ABC Learning, HIH Insurance and One Tel Phone Company, the present paper will
consider uncovering a few factors that added to liquidation of these organizations alongside
specific morals and manageable viewpoints that portrays such money related anxiety. The paper
uncovered that as the organizations were not competent to pay its banks, entering inside formal
bankruptcy arrangement may be regarded unavoidable. An alternative that can be considered by
these organizations is to pitch the business or resources for an alternate association which can
exchange gainfully in future.

LIQUIDATION OF COMPANIES 2
Table of Contents
1. Introduction......................................................................................................................3
2. Events that Resulted to Liquidation.................................................................................3
2.1. Events Resulting to Liquidation of ABC Learning..................................................3
2.2. Events Resulting to Liquidation of HIH Insurance..................................................3
2.3. Events Resulting to Liquidation of One Tel Phone Company.................................4
3. Ethics and Governance in Companies.............................................................................4
3.1. Ethics and Governance Failure in ABC Learning Company....................................4
3.2. Ethics and Governance Failure in HIH Insurance Company....................................4
3.3. Ethics and Governance Failure in One Tel Phone Company...................................5
4. Liabilities Contributing to Company Liquidation...........................................................5
4.1. Liabilities Contributing to ABC Learning Company Liquidation............................5
4.2. Liabilities Contributing to HIH Insurance Company Liquidation............................6
4.3. Liabilities Contributing to One Tel Phone Company Liquidation...........................6
5. Recommendations............................................................................................................6
6. Conclusion.......................................................................................................................6
Reference List......................................................................................................................8

LIQUIDATION OF COMPANIES 3
1. Introduction
Through taking cases of the chose organizations those are all around distributed, for
example, ABC Learning, HIH Insurance and One Tel Phone Company; the present paper will
consider uncovering a few factors that added to liquidation of these organizations alongside
specific governance and administration angles that depicts such money related anxiety.
Liquidation of an organization can be clarified as a procedure of closing down of the firm due to
specific reasons, for example, absence of visionary administration, pointless imaginary resources
portrayed in accounts and expanding obligation with inadequacy to address the same. Absence of
benefit arranging control and consistent misfortunes over years can likewise bring about
organization liquidation (Ang 2014). Over the previous years, it has been watched that various
understood organizations went into liquidation for the reason that they are not sufficiently
competent to address their liabilities when they fall due. The target of the paper is to uncover the
explanation behind which a few organizations went into liquidation.
2. Liquidation Causes in the Companies
2.1. Liquidation of ABC Learning: Reasons
• The ABC Learning Company, highly overwhelming with government officials, seem
to have fundamentally flopped in practicing an essential level of control over Eddy
Groves and his administration. The Government ought to force fundamentally higher
responsibility prerequisites on private division administrators, and specifically build
up an indistinguishable kind of value direction from the private medical coverage
needs to submit to. This will keep the kind of endowment cost spirals saw not long
ago when the Government expanded its childcare advantage appropriations.
• As per ASIC grumbling it was uncovered that the budgetary detailing strategies those
were utilized by ABC Learning Company were produced for misleadingly creating
investor esteem regardless of the way that such esteem is related with childcare
licenses. This was depended on the organization's future money streams that won't not
be figured it out. Thus, it is expressed that such lead of the organization was
misdirecting for speculators.
• Failure to keep up suitable bookkeeping and administrative procedures and poor
advancement of the organization's law and bookkeeping gauges has added to the
crumple of ABC Learning.
• Profits procured by ABC Learning Company expanded bit by bit through acquisitions
that addressed about the valuation of fundamental resources by the organization. Such
characteristic hazard connected with resources valuation was tremendous and
demonstrated liquidation dangers for the business (Carpinelli et al. 2016).
2.2. Liquidation of HIH Insurance: Reasons
An explanation behind disappointment of HIH Insurance was accounted for to be flawed
administration of modifying economic situations that expanded liabilities of HIH Insurance. This
was not put down by activities of key arranging that was enormously anticipated that all together
would retain such changes. This clarified changing economic situations caused destabilization
for the insurance agency.

LIQUIDATION OF COMPANIES 4
Lack of administration in HIH Insurance Company with no real oversight brought about
checking the technique created by HIH Company was fiscally shaky. Liquidation of the
organization occurred as it neglected to comprehend the degree to which additional arrangements
were rolled out important to influence improvements in the organization's market condition (To
dim 2017). A main consideration perceived for fall of HIH Insurance was its ineptitude to
address the imaginable future cases. Covering all the future cases is esteemed to be a key part of
the insurance agency's business. Be that as it may, with the finish of HIH Insurance Company's
presence it was in a circumstance in which a negative move of 1.7% that was sufficient to make
the organization indebted (Gerner-Beuerle and Schuster 2014).
2.3. Liquidation of One Tel Phone Company: Reasons
In spite of having a protected position, One Tel Phone Company had exceedingly
improper structure of corporate administration. Liquidation of the organization occurred as non-
official executives accomplished lacking checking and administration oversight that was shown
in review, corporate administration and compensation board of trustees' structure (Kaveri 2016).
One Tel Phone Company liquidation occurred as a result of its forceful obtaining
approaches that brought about clash among boost of benefit alongside usage and adherence to
viable techniques of corporate administration. The key issue that brought about liquidation of
One Tel Phone Company was their enthusiasm for keeping up low yield business alongside not
putting aside sufficient capital with a specific end goal to cover future liabilities (Jones 2016).
3. Governance and Ethics
3.1. Governance and Ethics Collapse in ABC Learning Company
Liquidation of ABC Learning Company occurred as a result of intense disappointment of
morals and manageable structure in the organization. It is uncovered that the organization did not
have satisfactory arrangement of major corporate administration structures and turned into a
casualty of uncommon, obligation based securing binge. Poor corporate administration and
farfetched bookkeeping was the situation of the organization (Locke 2015). The organization did
not submit to the principles of corporate administration.
There were sure moral worries that brought about liquidation of ABC Learning
Company. Alongside issues of owning the market, there were a few quality worries in the
training offered inside the focuses. There was a chosen arrangement of youngsters to stuff
proportions. Hence, certain debasement in the quality inside the administrations of the
organization was watched for there was insufficient number of staff for going to the understudies
(LoPucki and Doherty 2015).
3.2. Governance and Ethics Collapse in HIH Insurance Company
Revaluation of the licenses was permitted inside the bookkeeping norms. Additionally,
new standard of AASB 138 "Elusive Assets" encourages impalpable resources revaluation
sometimes. Such guidelines simply apply in which bookkeeping treatment has certain material
effect. Considering the same, it is clear that HIH Insurance Company was associated with acts of
neglect if there should arise an occurrence of its record support in light of which estimation of its
offers dropped. Legitimate moves were additionally made against the association (Manganelli,
Morano and Tajani 2014).

LIQUIDATION OF COMPANIES 5
Besides, nearness of a prevailing CEO inside HIH Insurance Company is regarded to e a
tremendous danger to capacity of the organization's corporate administration model and lifted its
danger of getting withdrew from the partners premium and getting associated with corporate
overabundance. The legislature built up a commission for scrutinizing the matter of
disappointment of ASIC that can esteem viably certain working licenses of HIH Insurance
Company. The administration addressed disappointment of ASIC in care of the organization in
adequately esteeming its working licenses. HIH Insurance Company guaranteed expanded an
incentive in such licenses those were really of less incentive in thought to exchanging sense
(Maburutse 2015).
3.3. Governance and Ethics Collapse in One Tel Phone Company
Non-official chiefs had flawed checking and perspective of the administration that was
demonstrated in the review organization, compensation councils and corporate administration
that were commanded by the CEO and in addition official executives. One Tel Phone Company
fallen due to a few corporate administration disappointments (Sengupta and Sharma 2016). One
of such reasons was that the CEO had high effect on an uncouth governing body that can
influence later insufficient alongside diminishing its ability to offer a productive control and
oversight.
Liquidation of One Tel Phone Company additionally shows a few noteworthy
insufficiencies in corporate administration structure of the organization. Regardless of having
such solid money related position, the organization had exceedingly insufficient structure of
corporate administration (Ogbari et al. 2015).
4. Liabilities and Company Liquidation
4.1. Liabilities and ABC Learning Company Liquidation
Inappropriate administration of liabilities brought about liquidation of ABC Learning
Company. With time, it was watched that the organization was overpowered with obligation
reimbursements for which it needed to offer very nearly half of its US auxiliary and its whole
UK backup. Such turnaround design was dismissed by its banks and added to the fall of ABC
Learning Company.
Add up to liabilities of ABC Learning Company remained profoundly steady. Be that as
it may, benefits of the organization dropped in light of erratic charges and contracts for
obligations of around $1.2 billion were ruptured (Gerner-Beuerle and Schuster 2014). After the
organization got recorded on Australian Stock Exchange, it had $25 million resource
capitalization (Manganelli, Morano and Tajani 2014). Market capitalization of the organization
expanded to $2.5 billion in the following year (Van Niekerk 2015). It brought about disgraceful
risk upkeep inconvenience for ABC Learning Company in which it took a stab at arranging
certain credit concurrence with its financiers.
4.2. Liabilities and HIH Insurance Company Liquidation
Liabilities of the organization moved toward becoming increased that made it the biggest
corporate disappointment in Australia. One of the real issues that brought about liquidation of

LIQUIDATION OF COMPANIES 6
HIH Insurance Company incorporates their energy to accomplish low yield business alongside
not keeping up enough capital for tending to the future liabilities (Gray 2017). Such issue came
about n administration inability to uphold and check for due tirelessness conducts.
4.3. Liabilities and One Tel Phone Company Liquidation
Costs and liabilities of the organization expanded so quickly that the charging framework
was not ready to oversee it that brought about crumple of One Tel Phone Company (Van Niekerk
2015). The organization fallen on the grounds that it had no money to pay off every one of its
costs alongside having a high obligation.
5. Recommendations
In the wake of watching the significant explanations behind which entrenched organizations,
for example, ABC Learning, HIH Insurance and One Tel Phone Company went into liquidation,
a few noteworthy procedures are prescribed to the organizations that can encourage them in
managing unfriendly circumstances of liquidations.
The organizations are prescribed with lenders alongside considering a settlement sum or
installment design. To dodge liquidation the organization must consider enrolling with the
security on "Individual Property Securities Register" inside a different time. Use of more capital
for sparing the organization from liquidation can be another valuable system that can be utilized
by the organizations in keeping away from the unfriendly circumstance. This suggestion can be
successful as the organization simply needs to manage a set number of lenders.
As the organizations were not competent to pay its leasers, entering inside formal bankruptcy
arrangement may be esteemed unavoidable. An alternative that can be considered by these
organizations is to pitch the business or resources for an alternate association which can
exchange beneficially in future. The organizations must consider concentrating on its real
productivity drivers. Monetary council must be designated by the chosen organizations so they
are fit to keep up its money related position.
6. Conclusion
Through taking cases of the chosen organizations those are very much distributed, for
example, ABC Learning, HIH Insurance and One Tel Phone Company, the present paper has
considered uncovering a few factors that added to liquidation of these organizations alongside
specific morals and administration angles that portrays such money related anxiety. It was
accumulated from the paper that As per ASIC grumbling it was uncovered that the budgetary
detailing strategies those were utilized by ABC Learning Company were produced for
misleadingly creating investor esteem regardless of the way that such esteem is related with
childcare licenses. This was depended on the organization's future money streams that won't not
be figured it out. Thus, it is expressed that such lead of the organization was misdirecting for
speculators.
Also, another purpose behind disappointment of HIH Insurance was accounted for to be
defective administration of modifying economic situations that expanded liabilities of HIH
Insurance. This was not moved down by activities of key arranging that was significantly
anticipated that all together would ingest such changes. The paper additionally suggested that the

LIQUIDATION OF COMPANIES 7
organizations must consider concentrating on its real productivity drivers. Monetary council
must be designated by the chosen organizations so they are fit to keep up its money related
position.
.

LIQUIDATION OF COMPANIES 8
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