(PDF) The Company Liquidation
Added on 2021-05-31
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Running head: REASONS FOR LIQUIDATION OF COMPANIESReasons for Liquidation of CompaniesName of the University:Name of the Student:Authors Note:
REASONS FOR LIQUIDATION OF COMPANIES1Table of Contents1. Introduction......................................................................................................................22. Reasons Causing Selected Companies Liquidation.........................................................22.1. Liquidation of ABC Learning...................................................................................22.2. Liquidation of HIH Insurance...................................................................................42.3. Liquidation of OneTel Company..............................................................................53. Financial Stress Explained through Ethics and Governance...........................................63.1. Ethics and Governance Issues in ABC Learning136................................................63.2. Ethics and Governance Issues in HIH Insurance......................................................73.3. Ethics and Governance Issues in OneTel Company.................................................74. Conclusion.......................................................................................................................8References............................................................................................................................9
REASONS FOR LIQUIDATION OF COMPANIES21. IntroductionA company is deemed to attain a major objective of attaining profit along withconsidering maximization of value of the organization in order to enhance shareholders wealth.A company is concerned with the perceptual existence rather than certain factors that can shutoff its business operations and the major cause of the organizational liquidation (Ali 2016).Consideration of the business operations or the size of a company irrespective, it can be statedthat it gets liquidated and gets wiped out of the existence. There are numerous reasons for whichthe organizations face the issue of liquidation that encompass lack of management and corporategovernance alignment, negligence along with resource misuse. In consideration to same, themain objective of this paper is to explain the failure of some Australian renowned companiesbecause of faulty governance and ethics (Amendola, Restaino and Sensini 2015). 2. Reasons Causing Selected Companies LiquidationThe three Australian organizations that are focused on this paper and they enjoy theadvantage of being increasingly valued organizations of their times. This is because of theirinsolvency because of which liquidation of their assets took place on poor governance along ithethical grounds. The Australian company’s incudes HIH Learnings, ABC Learnings and OneTelCompany that paid the expenses of following a wrong path for maximizing value (Anderson2016). 2.1. Liquidation of ABC LearningABC Learning has its business operation within Australia along with other parts of theworld with a service of early childhood education. Eddy Groves is observed to be the founder of
REASONS FOR LIQUIDATION OF COMPANIES3the company who started it with opening few business units and went for strategic acquisitionquest. This is for the reason that the founder believed in following aggressive growth strategythat can decreased the intense competition from the industry. For this reason, the management’simportant motive was focused on acquiring most of the rival organizations that caused threat tothe ABC Learnings. At the time of quest to acquire companies, the organization consideredregistering decline in its profits at the end of mid-2017 (Bartlett 2015). It was eventually clarifiedthat the organization was not in a better position to adhere with the liabilities and went into thesituation of receivership. The management of the organization was dragged into certain legal proceedings in thecourt because of the fact that it was alleged with tampering management of its earnings thatindicates positive image of the company through hiding the actual value. The management ofABC Learning Company was alleged to overstate their profitability on order to indicate thebright side of the organizations financial position (Betta 2016). This can persuade the investorsto increase investment within the organization. It was also observed that the owner of thecompany was held responsible for its failure who was the suspect who was involved inmisguiding the company’s shareholders through not indicating the real situation of its financialsituation. The finance team also are the owners of the company regarding the consequences thatwas neglected by them (Saravanan and Thakkar 2018). The debt of the company drasticallyincreased through its constant acquisition strategy and the financial statements also encompassgovernment subsidy that was considered within future profit. This served as an aspect thatoverstated company profits in the viewpoint of shareholders. In addition, the owner consideredimplementation of their ideas within their business decisions that not just liquidated theorganization but also impacted confidence of shareholders (Bhadily and Hosie 2016).
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