Company Goes Bust
company clat_pg beginner case_analysisSo my friend's dad is managing director of XYZ Ltd, a small company in Delhi. He borrowed 50 lakhs from a friend to expand the business, but it didn't work out. Now they owe this friend 1.5 crores (yes, 12 times the initial amount, mind-boggling na!). Friend is now suing MD for the entire amount, saying he guaranteed the loan. But what about the other creditors, including the bank that gave them a loan of 2 crore? My friend says the bank can't recover its amount because of the guarantee by the MD. Is he right?
What legal remedy does the bank have in this case? Can they go after the MD or the company separately? Help!
4 Comments
"Main toh bolta hun, kuchh toofani baat nahi hai. Company ki bankraptta sirf ek ghatna hai, nahi to koi permanent solution. Kya company ne sahi vyavastha karein, tabhi to uski bankraptta nahi hone degi. Aur koi bhi case hai, usmein bhi judge kuchh samajhdaar rahunga.
"Company goes bust, kya karun? Essentially, it means company ko paani bhi nahi ho raha hai. They can't pay their debts, aur business band ho jata hai. Shareholders jhuke huye hain, employees bina kuch karke pade hain. Company ke assets (jaise property, machineries) auction mei jaate hain. It's a big setback for everyone involved!
"Company Goes Bust" - ye phrase hai, common hai, lekin kuch logon ka samajh nahin hota hai uska arth. To, yeh kahna hai ki ek company jab kisi bhi karn bankrupcy se guzarti hai, to yeh "bust" kaha jata hai. Iske andar company ke assets aur liabilities ke beech ka bhavishy badalta hai. Company ke owners, employees, aur creditor ko financial loss hota hai.
Arre, I think there's some confusion. When we say company goes bust, it's not literal. It means the company has become insolvent, unable to meet its debt obligations. This can happen due to various reasons like mismanagement, market fluctuations, or excessive borrowing. In such cases, the company may go into liquidation or receivership, affecting its stakeholders, including shareholders and creditors.