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Anonymous

18 Apr 2019

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What happens to the management and investors of a company when the company goes bankrupt?

Will they get filed for bunkruptcy as well?

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Png Cheng Xi Damien

25 Sep 2018

Happy Life Seeker at Home

When a company is declared bankrupt, it undergoes liquidation by court order. The company will cease to exist after the liquidation. Proceeds from liquidation will go first and foremost of creditors (who the company owe money to). Any remaining is then paid to investors according to share %.

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Unless there is strong evidence of negligence or misconduct, the management usually gets away scotfree. The lawsuit must be filed by investor(s). The management will only be liable for liquidation if they have guaranteed the debt of the company using their own assets. Most of the time, it's usually just the paid up capital.

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