If a corporation declares bankruptcy, can shareholders be held?
Shareholders are the owners of the stock of the corporation. If the corporation is performing well and its stock price increases or the corporation distributes its profit as dividends, those benefits are enjoyed by the shareholders. In case of debt holders, they are supposed to get the pre-specified interest amounts and the principal amount only regardless of how much the company has made profit. So, in case of bankruptcy, debt holders have preference in claim of the company its debt amount before shareholders. Though it seems that shareholders of a company are the owners of the company, but, in reality, they are the owners of the stocks of the company only, they are holding. They have the right to take decisions or to contribute to the strategic plan of the company. But their liability cant be extended to pay the debt after the company declares bankruptcy. If a corporation declares bankruptcy, shareholders do not personally liable for the unpaid corporate debt.