How is a Limited Liability company treated in law?

As a limited company is treated as a "person in law" it is responsible for its own debts. Creditors can claim only the company's assets and not the assets of any of the officers of the company.

If a limited company becomes insolvent and is forced to "wind up" only the property of the business can be used to try to clear its debts. The officers of the company retain their company salaries, they cannot be made bankrupt and they are free to form a new company.

If you trade as a partnership or as an individual, creditors can claim all your personal property to satisfy debts, and where this is insufficient, you can be made BANKRUPT. An undischarged bankrupt is forbidden from starting another business or becoming a director of a limited company.
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