Let's say myself and my two peers, Adam and Ryan, start a limited liability company together, called Adryda LLC. We each put in $10,000 and take 33% equity.
Later, Adryda buys a property with the $30,000 from equity plus another $270,000 of money from the bank.
The property, which no member of Adryda resides in, is a multi-unit residential property which brings in $20,000/year net income.
Unfortunately, a four hundred foot long golden condor swoops out of the sun and plucks our property bodily out of the ground, which is not covered by insurance.
As a result of this disaster, the overall value of the property is cut in half from $300,000 to $150,000. However, Adryda still owes the bank $270,000.
The question: If Adryda goes bankrupt, what happens to the investors' equity and the bank debt?
Can the bank come after Adryda's shareholders for the rest of its mortgage?