Business law Essay Example | Topics and Well Written Essays - 1000 words - 10

Business law - Essay Example While the determination of the causes of the collapse of corporate organizations is fundamental, courts discourage the filing of such cases by either the shareholders or creditors. The decision by courts to adopt the cautionary approach to such cases arises from a policy that seeks to protect the interest of the entire industry. Such subsequent claims undermine the future of the entire industry owing to the large volumes of indeterminate liabilities. After the collapse of a company, it becomes difficult to quantify the actual investment of every financer. Most of such organizations lose their assets a feature that makes it difficult for investigations to determine the actual liability the organization owes every investor. This has a negative influence on both the industry and the economy since auditors will subsequently withhold their services2. As explained earlier, quantifying unknown liabilities discourages the participation of auditors of will not trace such liabilities. The policy therefore seeks to protect the interests of all the stakeholders in the industry3. Various companies have collapsed through scandalous ways in Australia among other markets throughout the world. In the legal tussles that ensued after the collapse of such companies, the courts maintained integral view often seeking to cushion the various publics from incurring major financial loses4. Auditors have integral responsibilities in the evaluating and quantifying the amount of financial loses all the parties incur. However, the decisions of the courts vary depending on the unique features presented by every case. Ansett Australia, once a major airline company in Australia collapsed in 2002 following a series of unwarranted market forces. The company began incurring losses in 1999 following unscrupulous operations thereby prompting the courts to