Eli5: How an individual take a loan to buy a company, and have the purchased company responsible for paying back the interest?

Question

Can the company also be made responsible to pay back the loan itself, as well as the interest?

In: 19

Answer 1

More or less, if the individual owns 100% of the company after the purchase, then there is not a lot that an owner cannot have the company do.

The caveat is that the company cannot default on their own loans or creditors that existed prior to the purchase. So a company cannot pay the owners loans or interest and then not pay the company’s loans and interests. If that happens, the other creditors will sue and the courts will likely require that the company loans be paid back first before any money is returned to the owner.

If someone wholly owns a company, they can have the company do what they want (other than breaking the law or defrauding others). That is what ownership means.