Get Instant Help From 5000+ Experts For
question

Writing: Get your essay and assignment written from scratch by PhD expert

Rewriting: Paraphrase or rewrite your friend's essay with similar meaning at reduced cost

Editing:Proofread your work by experts and improve grade at Lowest cost

And Improve Your Grades
myassignmenthelp.com
loader
Phone no. Missing!

Enter phone no. to receive critical updates and urgent messages !

Attach file

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Guaranteed Higher Grade!
Free Quote
wave

Background of ABC Learning

Discuss About The Issues Businesses Of These Three Companies?

All over the world, another popular synonym of ‘Winding up’ is the process of liquidation of the companies as with the assistance of this process, business organizations use wind up all of their business processes (Uher et al., 2012). In this process, all the liabilities and rights of the companies are recognized and the companies wither settle all the dues of the creditors or they warrant the creditors with assets of the companies. Most of the companies operates as per ideas of the board of directors as the board of directors is the central part of the company’s management (Scholleova, 2012). They have the ultimate power to take major business decisions in order to keep the interest of the company’s stakeholders like shareholders, investors, customers and others. Effective decision-making process ensures the long run of the companies as it helps to develop effective business strategies. On the other hand, Corporate Governance ensures in the effective business operations of the companies as the effectiveness of the companies largely depends on various major aspects like principles, guidelines, code of conducts and others. It is considered as the major incapability of the companies in the field of corporate governance when they fail to comply with the corporate governance principles (Wang, 2012). This report is based on the liquidation or winding up of the businesses of three of the Australian major companies and they are ABC Learning, HIH insurance and One Tel Phone. The aim of this report is to focus on the specific reasons that led to the winding up of the businesses of these three companies.

In their earlier years, ABC Learning was well known for one of the major companies in the education industry of Australia. ABC Learning was listed in the Australian Stock Exchange (ASX) and the company had a market capitalization of AUD$ 2.5 billion. However, ABC Learning was confronted with major managerial issues after affecting with the subprime mortgage crisis, as the company was overwhelmed with the burden of debt repayment.  It was the failure of the auditors of ABC Learning as they failed to conclude the financial reports of the company regarding previous year’s profit. ABC Learning was established in 1988 in Queensland. Since the commencement of their business operation, ABC Learning was majorly successful to establish more than nine hundred centers all over Australia and New Zealand by 2006. In the year 2006, ABC Learning announced the acquisition of United State’s second largest child care provider for the amount of $330 million along with the acquisition of United Kingdom’s fifth largest child care provider Busy Bee Group. All these acquisitions helped ABC Learning to expand their business in United States and United Kingdom with one percent market share (smh.com.au, 2017).

Background of One Tel Phone

One Tel Phone was one of the major telecommunication companies of Australia. The company commenced its business operations in 1995 after the deregulations of the Australian telecommunication industry. At present, most of the Australian companies of telecommunication industry are under the external management of court appointed liquidator. The major focus of One Tel Phone was to fulfill the needs of the customers by delivering better quality of services and products. The major attempt of the company was to establish a youth oriented image with the help of selling mobile phones along with One Net internet services. Prior to the collapse, One Tel Phone became the fourth largest telecommunication company of Australia. The origin idea of the company was to start with the development of a simple mobile phone that all the customers can easily access and understand. The major focus of the company was on the residential people of Australia opposite to the commercial marketing. One Tel Phone wanted the whole group of customers of Australia to gain access on all the telephone products with the help of high marketing strategy (research-repository.griffith.edu.au, 2017).

HIH Insurance was one of the major insurance companies of Australia after the company commenced its business operations in the year 1997. In the year 1998, HIH Insurance made acquisition of many companies in Australia and all over the world. The company was listed in the Australian Stock Exchange (ASX) in the year 1992 and in 1995 the company sold most of its stake to Switzerland based company and changed its name to HIH Insurance. This particular deal comprised of the operations of Colonial Limited General Insurance in Australia and New Zealand. As per the estimation of the liquidators, the total loss amount of HIH Insurance was $5.3 billion. As a part of the investigation on HIH Insurance, large number of members of the company’s management within the organization were convicted and imprisoned based on various fraud cases. The collapse of HIH Insurance is considered as the largest corporate collapse in Australia history (hih.com.au, 2017).

The major reasons that contributed to the winding up and corporate governance failure of ABC Learning are stated below:

  1. In the second half of the year 2007, ABC Learning suffered an unexpected huge fall in the profit by 42% worth $37.1 million along with a major debt of the organization worth $1.8 billion. All these aspects contributed to the fall of the share process of the company (crikey.com.au, 2017).
  2. As a result of the fall in share prices, the company registered a fall of 43% in the price of the shares of $2.15 with a low of $1.15. At the end of the financial year, ABC Learning ABC Learning had to sell all of their stakes worth $20 million and $6 million for an amount of $2.7 million. This process contributed to the suspension of all the trading activities of the company as the company failed to failed to release the company’s reports of earning for the year 2007 to 2008.
  • In spite of the selling of the assets of the company, ABC Learning had to fall into massive financial problems due to the massive increase in the dent of the company and the auditors of the company failed to conclude the accounts (smh.com.au, 2017).
  1. In case of the calculation of Goodwill and others, ABC Learning followed the wrong method of accounting. By only charging the impairment of $8.4 million, ABC Learning made the valuation of goodwill and other intangible assets worth $2.4 billion. As a result of the adoption of wrong accounting method, the future cash flow of ABC Learning was found to be wrong and this aspects contributed to 42% loss of the company. This particular failure is considered as one of the major reasons for the collapse of ABC Learning

            The major reasons that contributed to the winding up and corporate governance failure of One Tel Phone are stated below:

  1. On a constant basis, One Tel Phone registered superior amount of profit and the company deferred the operating expenses for the period of three years. The accountant of the company adopted the accounting practices that were against the accounting standards and bookkeeping principles (wsws.org, 2017).
  2. The origin of One Tel Phone’s financial issues commenced in 2000 as the company registered a loss of $291 million. This contributed to the fall in share prices below $1.
  • At the end of 2001 April, One Tel Phone lacked required funds for business and as a result, Rodney Adler, the director of the company sold 5 million shares of the company for $2.5 million. As per the administrative report, One Tel Phone became insolvent and stared to lay off their 1400 employees (abc.net.au, 2017).
  1. The liquidation process of One Tel Phone demanded the compensation of $92 million from the directors of the company as the directors of the company failed to exercise their powers regarding effective due care and diligence.
  2. One of the major reasons of the collapse of One Tel Phone is that the company started to charge one seventh from their customers by considering the fact that they would be able to recover that in near future. However, this did not happened. As a result of this, One Tel Phone lacked required cash for operations that led to the liquidation of the company.

The major reasons that contributed to the winding up and corporate governance failure of HIH Insurance are stated below:

  1. In the process of acquiring FAI Insurance, HIH Insurance invested huge amount of money that affected the insurance business of the company. As a result of this, HIH Insurance had to concede massive damage.
  2. The entering of HIH Insurance in the film industry was one of the major reasons behind the fall of HIH Insurance. The company had to concede a loss of more than $100 million over the years out of these move (aph.gov.au, 2017).
  • HIH Insurance had to face major financial loss due to the natural disaster of Florida. As a result, the company had to take large amount debt that contributed to the collapse of HIH Insurance.
  1. The abrupt changes in the compensation policy of HIH Insurance were another major reason for the collapse of HIH Insurance that the company paid to the employees of California industry. The company had to face huge amount of loss for this.
  2. As per the liquidators, HIH Insurance lost over $800 million in a time span of six months. This was another major reason of the fall of HIH Insurance (smh.com.au, 2017).
  1. In ABC Learning, one of the major reasons for the liquidation is the wrong adaptation of accounting policies that led to the various accounting fraudulent. It is evident that ABC Learning displayed wrong bookkeeping process.
  2. Another major ethical issue in the liquidation of ABC Learning was the rendering of services to their customers. The company was held responsible for providing the customers with improper rendering of services (Ford and Richardson, 2013).
  1. One Tel Phone violated many accounting rules and practices. As a result of this, One Tel Phone violated the principles of ethical code of conduct and compliances.
  2. Regarding the business operations, the management of One Tel Phone failed I monitoring the financial performance of the company and they ignored the important areas of investment that contained high risk (Wang and Hsieh, 2013).
  • Another major ethical reason for the liquidation of One Tel Phone was the failure of company’s director in the adoption of strong pricing strategy. As a result of this, One Tel Phone has to concede loss of income and other financial problems. It can be said that the directors of One Tel Phone failed to act ethically in discharging the business obligations.
  1. Without obtaining the approval from Board of Directors, HIH Insurance acquired the business of FAI Insurance. This aspect shows the poor corporate governance of the company.
  2. Another major ethical issue in HIH Insurance is that the company did not pay adequate attention to carry the business operations as per the due diligence. Constant changes in managerial position were another issue (Slade and Prinsloo, 2013).
  • It was charge on Mr. William that he was responsible for improper management as he was accused for material misstatement and to overstate the organizational profit for the year 1998 to 1999.

Background of HIH Insurance

Conclusion

From the above discussion, it can be seen that poor corporate governance and ineffective identification of the financial risk factors were major reasons for the liquidation of these companies. In addition, the failure of these companies to adopt the fair financial practices is another major reason for the winding up of the businesses of these three companies. Apart from all these issues, the presence of some major ethical issues can also be noticed in the wading up of these companies. Thus, it can be concluded that both financial and ethical issues are there behind the liquidation of ABC Learning, HIH Insurance and One Tel Phone.

Based on the above discussion, some recommendations are provided below:

  • It is recommended to the business organizations to they should implement effective corporate governance strategy in order to find the business risks.
  • It is recommended to the business organizations that they should adopt true and fair accounting policies in order to carry on the accounting and financial operations.

References

ABC News. (2017). OneTel...one big debacle. [online] Available at: https://www.abc.net.au/news/2009-11-20/28324 [Accessed 10 Sep. 2017].

Aph.gov.au. (2017). HIH Insurance Group collapse – Parliament of Australia. [online] Available at: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Publications_Archive/archive/hihinsurance [Accessed 10 Sep. 2017].

Cook, T. (2017). Collapse of Australia's fourth largest telco adds to growing list of corporate failures. [online] Wsws.org. Available at: https://www.wsws.org/en/articles/2001/06/onte-j08.html [Accessed 10 Sep. 2017].

Crikey.com.au, 2017. ABC learning collapse is a policy failure. [online] Crikey. Available at: <https://www.crikey.com.au/2008/11/07/abc-learning-collapse-is-a-policy-failure/> [Accessed 10 Sep. 2017].

Ford, R.C. and Richardson, W.D., 2013. Ethical decision making: A review of the empirical literature. In Citation classics from the Journal of Business Ethics (pp. 19-44). Springer Netherlands.

HIH Insurance, 2017. HIH Insurance. [online] Hih.com.au. Available at: <https://www.hih.com.au/> [Accessed 10 Sep. 2017].

Kruger, C., 2017. Lessons to be learnt from ABC Learning's collapse. [online] The Sydney Morning Herald. Available at: <https://www.smh.com.au/business/lessons-to-be-learnt-from-abc-learnings-collapse-20090101-78f8.html> [Accessed 10 Sep. 2017].

Kruger, C., 2017. Numbers finally start to add up as operators go back to basics. [online] The Sydney Morning Herald. Available at: <https://www.smh.com.au/business/numbers-finally-start-to-add-up-as-operators-go-back-to-basics-20110121-19zy6.html> [Accessed 10 Sep. 2017].

Scholleova, H., 2012. The Economic Crisis and Working Capital Management of Companies. Theoretical and Applied Economics, 4(4), p.79.

Slade, S. and Prinsloo, P., 2013. Learning analytics: Ethical issues and dilemmas. American Behavioral Scientist, 57(10), pp.1510-1529.

Smh.com.au. (2017). HIH : The Inside Story Of Australia's Biggest Corporate Collapse - smh.com.au. [online] Available at: https://www.smh.com.au/articles/2003/03/14/1047583693489.html [Accessed 10 Sep. 2017].

The One.Tel Collapse, 2017. The One.Tel Collapse: Lessons for Corporate Governance. [online] research-repository.griffith.edu.au. Available at: <https://research-repository.griffith.edu.au/bitstream/handle/10072/42673/74746_1.pdf> [Accessed 10 Sep. 2017].

Uher, M., Nagy, C.M., Cotlet, B. and Cotlet, D., 2012. Merger of Commercial Companies in the Conditions of the Financial Crisis. Anale. Seria Stiinte Economice. Timisoara, 18, p.417.

Wang, C.A., 2012. Determinants of the choice of formal bankruptcy procedure: An international comparison of reorganization and liquidation. Emerging Markets Finance and Trade, 48(2), pp.4-28.

Wang, Y.D. and Hsieh, H.H., 2013. Organizational ethical climate, perceived organizational support, and employee silence: A cross-level investigation. Human Relations, 66(6), pp.783-802.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). Reasons For The Winding Up Of ABC Learning, HIH Insurance, And One Tel Phone Are Essay-worthy.. Retrieved from https://myassignmenthelp.com/free-samples/issues-businesses-of-these-three-companies.

"Reasons For The Winding Up Of ABC Learning, HIH Insurance, And One Tel Phone Are Essay-worthy.." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/issues-businesses-of-these-three-companies.

My Assignment Help (2018) Reasons For The Winding Up Of ABC Learning, HIH Insurance, And One Tel Phone Are Essay-worthy. [Online]. Available from: https://myassignmenthelp.com/free-samples/issues-businesses-of-these-three-companies
[Accessed 27 February 2024].

My Assignment Help. 'Reasons For The Winding Up Of ABC Learning, HIH Insurance, And One Tel Phone Are Essay-worthy.' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/issues-businesses-of-these-three-companies> accessed 27 February 2024.

My Assignment Help. Reasons For The Winding Up Of ABC Learning, HIH Insurance, And One Tel Phone Are Essay-worthy. [Internet]. My Assignment Help. 2018 [cited 27 February 2024]. Available from: https://myassignmenthelp.com/free-samples/issues-businesses-of-these-three-companies.

Get instant help from 5000+ experts for
question

Writing: Get your essay and assignment written from scratch by PhD expert

Rewriting: Paraphrase or rewrite your friend's essay with similar meaning at reduced cost

Editing: Proofread your work by experts and improve grade at Lowest cost

loader
250 words
Phone no. Missing!

Enter phone no. to receive critical updates and urgent messages !

Attach file

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Other Similar Samples

support
Whatsapp
callback
sales
sales chat
Whatsapp
callback
sales chat
close