Liquidation is for Companies. Bankruptcy is for Individuals:
At law a Company is a person that is separate from its directors and shareholders.
This means that if a Company is unable to pay its debts from its own resources, the directors and shareholders do not have to pay those debts personally. It is the Company alone that is responsible for paying its debts. However, a director may have personal liability for Company debts in certain circumstances.
The shareholders liability is limited to any unpaid capital not paid in relation to the shares they hold.
For example, if a shareholder is allotted 10,000 x $1 shares and have paid $10,000 for those shares, they cannot be asked to pay anything further to the Company. If however they have only paid $1,000 for those same shares, then the limit of their liability is to pay a further $9,000 – being the unpaid capital amount.
A director also has no liability for the Company’s debts. However, a director may be held personally liable in a number of circumstances including director loan accounts.
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