History is filled with the tales of business collapses of companies that have faced legal issues.
As early as 1494, the Medici Bank, which was owned by the Italian Medici family dynasty, collapsed after members of the family illegally used significant funds from the bank to sustain their lifestyles.
In 1963 in the US, Allied Crude Vegetable Oil Refining Corp collapsed when leader Tino De Angelis was exposed for defrauding clients for his own benefit.
In 1983, Carrian Group marked the largest business collapse in Hong Kong history when an auditor who raised the alarm on accounting fraud was murdered. An accounting advisor committed suicide to avoid legal pursuits.
In 2002, Adelphia Communications filed for bankruptcy on the basis of internal corruption. At the end of the investigation, members of the Rigas family were sentenced to prison.
These are only some of the many cases of business collapse throughout history that have occurred as a result of legal pursuits against the company or some of its members. Entrepreneurs, therefore, may wonder if a business can recover from legal pursuits? The answer depends on the offense, the relevant defense system, and the recovery strategy.
CEO or public-facing figure is arrested
What happens to your company when one of its eminent public-facing figures is charged with a crime? While the collapse in the stock exchange market may be imminent, you could save your business reputation and survival by working with trusted criminal lawyers who can provide the help you need. A criminal lawyer does not erase complaints or crimes, but it is a person who can help shed a more realistic light on the situation. A one-off event of violence, for instance, may have been the result of high stress and harassment. Fraudulent estate planning could be caused by poor advice rather than intentional criminal activity. Providing the defense required can protect your business from further damage.
Your taxes are not up to standard
Small businesses are the first to fall into accounting traps. If you don’t work closely with a professional accountant from Day One, it can be hard to keep your corporation tax return up to standard. However, tax mistakes can be recovered, both with the tax authorities and in the public opinion, if you reach out to a professional accounting service agency.
Your audience is more likely to lose faith in the brand if they realize that you were able to zero out your federal income tax or receive a considerable rebate. This is the case for Amazon, for instance, which enjoys an effective tax rate of -1% rather than the usual 21%. For individual taxpayers, it is frustrating to know that a successful company can legally cheat the system.
Your product is dangerous
Can you recover from an unsafe product? Facts show that you can if you take swift actions. Johnson & Johnson recalled a product that had been tampered in 1982. The recall was expensive and led to profit loss. However, the decisive action allowed the company to recover within a few months. The lesson: Quick response can save both lives and your business.
In conclusion, why nothing can exonerate a business from legal complications, securing the appropriate defense mechanism, and acting quickly with the best interest of your customers at heart can prevent dramatic consequences. Many companies have faced legal challenges that have redefined their brands for the better.