ACC701 Liquidation Of Three Companies - Assignment Solution

• Introduction 

The liquidation of company becomes necessary when it is no longer in position to pay its obligations and thus it is liquidated to bring business to end such that assets of company can be dissolved and distributed among claimants. Liquidity has remained a common phenomenon across different industries and in current essay liquidation case of three Australian companies has been considered. The liquidation events of Aluminium Boats Australia, HIH Insurance and Stellar Homes are investigated to indicate the core reasons behind liquidation. Additionally, insight has also been obtained from APES 110 Codes of Ethics. 

• Liquidation of three companies

• Aluminium Boats

Aluminium Boats Australia was Brisbane-based which has been considered as specialized company in development and maintenance of defence, commercial and luxury boats and vessels. As part of its operations, Aluminium Boats was in contract with Royal Australian Navy and Police service of Queensland, among others (Coombs, K. and Waters, 2014). The company has collapsed and entered into voluntary administration, when one of its massive vessel has caught fire (Carfrae, 2014). It has been analysed based on the view of director of company, Roy Whitewood, that downfall of company has begun with the destruction of Aluminium Boat’s HMAS Bundaberg (Ballantyne, 2015). The Bundaberg was destroyed when it was under maintenance at Hemmant Ship yard and it has catalysed the decline of company (Coombs, K. and Waters, 2014). Followed by this incident, Aluminium Boats Australia has lost its existing contract with Royal Australian Navy which was a major loss for the company. The company had employed around 160 employees, of which 90 employees were fired as part of lay-off policy (Ballantyne, 2015). After 3 months, the remaining 70 employees were also laid off. It was later highlighted in reports that industry is undergoing substantial challenge as cheaper imports are prevailing and thus restricting success prospects for Australian made vessels and boats (Carfrae, 2014). Thus, in addition to internal reasons, external industry conditions have also been linked with voluntary administration placing of Aluminium Boats Australia. 

• HIH Insurance 

HIH insurance was consisting of multiple Government licence insurance companies and it was placed into provisional liquidation in 2001 based on the approval of NSW Supreme Court (Anon, 2001). The company has itself applied for provisional liquidation as it was experiencing multiple issues. Such as, company was experiencing deficit of its assets against liabilities which was equivalent of 5 billion Australian dollars. The company was also being followed by Royal Commission with the purpose of recovering around 50 million Australian dollars. The Governance of company has also been considered as incapable and conglomerate issue was also noticed in case of HIH insurance (Australian Government, 2015). Based on the declining income of the company and governance issues, HIH has gone into liquidation with losses of around $800 million and liquidators have maintained that it can take more than 10 years to become able to pay creditors (Cleary, 2001). The company has faced major investigation from Australian Securities and Insurance commission and its documents were seized and it has been termed as one of largest corporate collapse of Australia.