Question

It was found that the liabilities of a corporation are far excess than its assets after it became bankrupt. You are a shareholder in that corporation. You will be called on to pay _________________________________________.

• A. a proportionate share of all the liabilities claims based on the number of shares that you own
• B. a proportional share of all creditor claims based on the number of common shares that you own
• C. an amount that could, at most, equal what you originally paid for the shares of common stock in the corporation
• D. none of the above

Answer 1

The correct option is B a proportional share of all creditor claims based on the number of common shares that you own

It was found that the liabilities of a corporation are far excess than its assets after it became bankrupt. You are a shareholder in that corporation. You will be called on to pay a proportional share of all creditors claims based on the number of common shares that you own as shareholders are also known as the owners of the company and it is the duty of an owner to pay the creditors acording to the proportion of shares he/she hold.