Answer: Generally, individual shareholders are not personally liable for a corporation's debts. However, in some circumstances, individuals can be held liable. For example, if a shareholder has signed a personal guarantee for corporate debt, a credit can collect the corporation's debt from the guarantor, similar to the way a co-signer can be held responsible for a personal debt he co-signs. In some states, a creditor can "pierce the corporate veil" to reach shareholders' personal assets if personal and corporate business have been intermingled. A shareholder may also be personally liable for a corporate debt in cases involving fraud.
Explanation:
Many corporations own property that is secured by debt such as vehicles, equipment and inventory. The creditors will go after the corporation's assets that is owned at the time of dissolution. This would include bank accounts, personal and or the corporation's properties.Also, any items being bought by the company for their usage like computers, vehicles, equipment, etc. may still be considered assets of the corporation and will be used to pay off the creditors.
With a secured loan, if a corporation misses enough payments on the debt, the creditor can repossess the secured property.
The terms of the loan agreement and state law specify when, how and under what circumstances a creditor can repossess and resell secured property. If the property gets repossessed, a corporation may have to pay the difference between the amount the corporation owes and the amount the creditor receives for the property.
