The consideration of ethical and legal issues in the business world is mandatory in recent times. This is on the concept of increased competition in the business arena as well as increased awareness of the consumer on quality and execution of ethics. In this phenomenon, it’s necessary for any business entity to ensure adherence to the set business and legal laws. This will not only establish favorable environment for business but also a good image for the business entity. Many businesses are usually involved in various situations which are perceived to be illegal or unethical. Just like any other entity, the business should be responsible for its actions. Precisely, the bankruptcy case of the General Motors in 2009 is very interesting. In this regard, this paper will analyze and profoundly discuss the legal and ethical issue involved in the General Motors’s bankruptcy case and giving personal opinion on the decision on the case (Cross 234).
The bankruptcy case involving GM and its creditors in the year 2009 has been hotly debated in the public arena. The case was legally justified in regards to the U.S Bankruptcy code. There were many misappropriations in the conduct of the company regarding the assets of the company. The issue of the 363 sale was very illegal; whereby the company unscrupulously transferred the entity to NGMCO, Inc. the ideas and decisions to the above action was unlawful. This is in consideration that, the creditor’s interests were not considered. In the business setup, it’s the responsibility of the business to ensure protection of its shareholders or the general public who have interest in the company (Womack 1)
The aspect of business being a legal entity ensures that the company is responsible of any consequences.
With this regard, general motors had the obligation of bearing its burden. The concept of transferring its debts to other entities is unlawful. In this case, the decision on the liquidation of the company was very justified. This is in accordance with the interests of the creditors who have a larger stake in the company. It should be noted that, the rights of the creditors had to be prioritized; whereby the misfortunes facing the company should not have been maliciously transferred to the creditors. Based on this phenomenon, the decision to liquidate the company so as to pay the creditors was legally justified (Seglin 79).
The decision to pay all creditors by liquidating the company was very helpful to the creditors. This is so because; the company’s limited liability would only lead to violation of the creditors interests. In business legal arena, the rights and interests of the creditors, customers and other stakeholders are the main priority. Based on the case of General motors, the fete of the creditors was at jeopardy; thus calling for intervention. The court ruling was a big relief to the creditors whose plight had been doomed following the company’s unscrupulous dealings. Most precisely the 363 sale was very malicious and unacceptable thus calling for legal actions (Cross 234).
From another perspective, the limited liability of companies is a very dangerous concept especially to the creditors, suppliers or customers. With this in mind, the concept of limited liability protects the business in the case of misconducts at the expense of other stakeholder. In this situation, the legal systems should be stead fast in ensuring all the rights of the various parties to a company are protected. The issues of fairness in making legal decisions should be the guiding principles (Seglin 79).
Additionally, the court ruling was very correct, since justice was accorded to the appropriate entities. For instances, many of the creditors were at risk of losing their facility rights if legal interventions were not meant. It’s evident that, the company had various long term loans from different entities which it was liable to pay. In this case, the change of the company’s entity would see all the creditors lose their share in the company. Further, the legal laws regarding loan and security agreements as well suppliers’ rights were adequately consulted in the ruling (Womack 1)
In the aspect of business ethics, the case decision was justified. This is following the repeated unethical practices being executed by the company on its creditors and other entities. In relation with this aspect, the company’s move to change its entity with out consultation of key stakeholders was unethical. This phenomenon justifies the decision on the case as ethical since justice was concisely executed. The interests of the general public were also considered through the case decision since fairness was executed (Cross 234).
Ultimately, it can be concluded that, the practice of ethics and legal abidance in the business context is vital. As witnessed in the General Motors case, justice was accorded sufficiently. Through this case, a living example was set to other companies to follow suit and maintain ethics and legal issues in business. Finally, it should be observed that, practice of ethics and legal issues is a key pillar to business success.
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