Private Equity Stock Options

Pearsos

Hello, does anyone know what happens if you hold private equity stock and the organisation goes bankrupt - Assume loose stock, but are you liable for any further costs or payments to creditors etc ? IE can I be pursued for any value in my personal assetts, house etc ?

charliemarsh

By stock I presume you mean shares in a company or holdings in a private equity fund which has invested in a company/companies...
A company is a legal entity separate and distinct from its members. As such there is a ‘veil of incorporation’ which protects the company’s shareholders from the liabilities of the company. Generally the liability of the shareholders for the debts of the company is limited to the amount unpaid on their shares and the principle that a company is a legal entity separate and distinct from its members is generally upheld.
However, in certain limited situations statute provides that shareholders may be held accountable, and there is also a thread of case law where courts have gone behind the status of the company as a separate legal entity distinct from its shareholders and has held the shareholders liable. For example, this may occur where a company is acting as agent for another entity or a group is structured in such a way as to conceal the acts of the parent / subsidiary (i.e. where the distinction between the companies is a façade or was established for the purposes of perpetrating a fraud).

So in short you should be ok - but this is no substitute for independent legal advice...