Question

Name an famous tax or bankruptcy case and what were the issues and outcome?

Answer 1

The Enron bankruptcy case is the most significant corporate collapse in U.S. that drew attention to corporate and accounting fraud as its shareholders suffered nearly $74 billion in the four years resulting to the bankruptcy, and its employees faced a loss billions in pension benefits. The management of Enron abandoned the basic accounting integrity standards and lead to a noncompliance that existed entirely different than reporting standards of SEC or GAAP. The company's management followed the path filled with unethical and illegal activities. They were succumbing to dishonesty and greed by constructing faulty falsely financial report and secretly exercising stock options which enabled to hide billions of dollars of debt. Eventually by December 2, 2001 the company filed for bankruptcy. Its shares in August 2000 were worth $90.75 however in January 2002 were reduced $0.67. The bankruptcy scandal not only not impacted the Enron and it shareholders however it effected the entire market as it lower company’s values that were in the same industry

The Enron's chairman, Kenneth Lay, following the investigation was termed for 45 years in jail on numerous account of fraud however died on 5 July 2006 before getting to prison. The company's chief executive officer, Jeffrey Skilling was sentenced prison for 24 years and 4 months in prison however with a deal with the U.S. Department of Justice it was reduced by 10 years