Baker & Partners are a firm of accountants appointed as liquidators of an insolvent building company, Zero Ltd. The assets of Zero Ltd consist of two unfinished buildings that would take one year to complete and sell, but which could be sold immediately at a "fire sale" (heavily discounted) price. They discover that Zero Ltd has the following creditors, all of whom are unsecured:

Building Supplies Pty Ltd, a major creditor and also a client of Baker & Partners, who is happy to agree with Baker & Partners recommendations;

Carpenters Ltd, who advocates delaying liquidation until completion of all current buildings because they would benefit from the extra work and an increased payout;

Small creditors with financial problems caused by delayed payment. Zero Ltd's can continue operating under the liquidator's administration if the creditors agree to a scheme of arrangement to do so.

a)

i) Define the ethical problem faced by the Baker & Partners. (Hint: there may be more than one, but you are asked to identify one only.)

ii) Identify two individuals or groups who are stakeholders and their rights or the duty owed to them by Baker & Partners.

For purpose of this question assume that in part a) the ethical issue was identified as what recommendation to make to the creditors.

b) Identify two principles relevant to the ethical problem faced by Baker & Partners and explain why they are relevant. At least one principle should be from APES 110.

c) Describe two different options that Baker & Partners could consider.

d) This part of the question asks you to investigate the ethical outcomes with reference to the principles that you identified in part b) as being most relevant, and the stakeholders identified in part a) ii):

i) Discuss at least two potential ethical outcomes of the option suggested at c) I)

ii) Discuss at least two potential ethical outcomes of the suggested at part c) ii).

e) Make a recommendation and identify which principle(s) it upholds.