Chesapeake Energy Company must take appropriate measures to avert the looming liquidation it faces after Otis Eastern Service took over the company following its inability to clear all bills it owes to Otis Eastern Company. The takeover would be detrimental to the company as its former employees would be denied an opportunity to receive their retirement benefits invested in the company’s shares. In its efforts to salvage itself from the impending situation, the company should pursue some strategies. To begin with, the company should design a proper strategy plan. Dyck & Neubert (2008) define strategy as a combination of goals, plans, and actions designed to accomplish an organization’s mission. The company currently has no strategic direction. …show more content…
The company’s CEO, McClendon, borrowed $ 1.1 billion which he used to buy shares in the company. He reportedly borrowed these funds from the company and invested in the same company. Moreover, he runs a $ 2000 million fund which deal in the same products in which the company ‘employer’ deals in. Shareholders were never informed of these facts. This act compromises the pronouncements of corporate governance principles developed by leading stock markets and governments. Du Plessis, Hargovan & Bagaric (2010) note the importance of senior executives adhering to the code of ethics in promoting the aspirations of shareholders and company’s core values. The act committed by McClendon might result to the delisting of the company’s shares from the stock market without further warning. The CEO facilitated what is commonly referred to as insider trading wherein the shares of a company are purchased by senior management who are aware of information which is likely to affect the prices of the shares and external shareholders and potential investors are unaware of the information at the time of the sale or purchase of shares. Moreover, commercial law deters senior management from acquiring loans from the companies they run provided the proceeds from the loan are to be used to purchase shares issued by the company. The exiting situation can be solved by