If the company ceases to trade before these goods or services are provided, the customer is likely to lose all of his deposit. Similarly guarantees for goods bought or services provided are likely to be worthless if the company ceases to trade before the guarantee expires. The amount lost by customers at the present time in such ways in the UK is apparently of the order of 18 million each year. Employees also lose out if a company becomes insolvent. Salaries, wages, holiday entitlement and redundancy compensation can be lost, quite apart from the social costs of the resulting unemployment to employees and to the community.
Banks also lose out when companies become insolvent.
But banks are regarded as having much expertise in assessing the risks they take when lending money to their customers including companies. Assessing such risks is their business and they are paid for the risks they take by the interest paid to them for the loans they make. Recently changed so that a private company's name now ends with the words 'Company Limited' or the abbreviation 'Co Ltd'. A public company's name now ends with the words 'Public Limited Company' or the abbreviation 'PLC'.