Business Bankruptcy?

My Friend is the owner of a private limited company and the company has been sued and they can not pay the debt and they would like to declare the company as bankrupt. As far as I know he will not become bankrupt but will lose the amount of share he had originally invested but What I don't understand is that by saying originally invested for example if he invested 拢1 would that be 拢1 or the amount that company is now worth?

Thanks

its in the best interest that he declare bankruptcy with an attorney. they could best decide which form of bankruptcy is better, either a reorganization or liquidation. In either case, any monies invested so far are gone.

Now if he personally has loaned the corporation money and has a note, then he is also a creditor and has the same rights as other creditors. this must have occured befor filing with the bankruptcy court.

At the time of filing for Bankruptcy, the value of the company is now the "Book" value. = sum of all the parts, plant, inventory, product, equipment etc. The value of certain kinds of share will change.. for instance Class A stock (1 vote per share) may have no value after reorganization. Class B stork (multiple votes/share) may retain some value and exchange for warrants in thenew company.

how the stocks are treated really depends upon how the reorganization goes. If an "Angel" steps in to refinance the company and save it, then the Angle may want shares at a discount...........

wer

Bankruptcy laws are too complex, your friend needs to contact an attorney who specializes in business bankruptcy law in his area.

I am not sure about Britain, but in the USA, a creditor can file involuntary bankruptcy on a company and the assets would be sold by a trustee to pay the debt.

Your friend's investment is meaningless. In a company solvency issue where the assets are liquidated, debt has preference over equity.