17 September, 2015

Typos Can be Deadly

Typos can be deadly for companies.  All limited liability companies in the United Kingdom are required to register with a government agency called Companies House, which records financial statements and other corporate information.  This is their equivalent to Singapore's Accounting & Corporate Regulatory Authority.

In 2009, Companies House reported that Taylor & Sons Ltd., a 124-year-old engineering company, had been declared insolvent.  That was news to the management and employees of Taylor & Sons, a very much functioning company.  Almost immediately, they were plunged into crisis.  Believing the company had collapsed into bankruptcy, customers cancelled orders, contracts were declared void, and suppliers stopped offering credit.  To compound matters, the company’s managing director was on vacation, causing clients and creditors to believe he had fled the country.  Operations slammed to a halt, and Taylor & Sons found itself forced to close for real.  All 250 employees were laid off.

As it turned out, Companies House actually meant to record the closure of Taylor & Son, an entirely different company from Taylor & Sons.  The now-liquidated Taylor & Sons sued Companies House and won; the judge ruling the agency completely responsible for the collapse of the £8.8 million company.  Now, if they had some form of liability protection, they could have mitigated this immediately.

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