Business entities are legal structures created by man for his commercial needs. They exist in law, separately from their creators, and bestowed with a legal personality. Companies, however, are not immortal. Some are voluntarily terminated by their controllers, while others "fail" or "collapse" because of some inherent weakness. This report focuses on the processes of that failure, and the motivations of those involved.
The causes of failure are examined by investigating and recognising an acceptable description of failure. This description is then applied to case studies of firms which have experienced decline and collapse. Investigation of these cases will lead to the examination of the driving forces behind failure, and then a shift in direction. What is observed is a replacement of the controllers in place during the "going concern" phase. They are frequently usurped by those next at risk. These could be the lenders, or others acting through the courts. On occasion, the benefit to "residual legatees" can be improved by an alternative to formal proceedings. In explanation of this, the mechanisms and beneficiaries of informal work-outs are introduced.