“Limited liability” generally refers to Limited Companies (and LLP’s). If they fail, the assets of the Company will be lost, but all of the personal assets of the shareholders will be safe. So, the business owners still keep their homes and investments and could start up a new business.
When there is a lot of capital tied up in the Company – in the form of plant and equipment; vehicles; property etc. – all these assets would all be lost. Then, starting up again could mean that years or even decades may be needed to build up all these assets again. So although the liability is limited to the assets of the company, when plant, machinery etc. is involved the price is very high.
Renting your assets to your Company
If your Limited Company has a large amount of capital tied up in plant, machinery etc., you could consider separating these assets from the trading of the Limited Company by transferring them at market value (either to have them personally owned, or owned by a separate Limited Company) and then rent the assets to the trading Limited Company at a fair value.
Obviously, if there are HP or loan agreements tied to some of the assets, this will complicate things, but assets bought for cash, or those whose HP accounts have been paid up, can be transferred. New HP assets/accounts could also be set up in the hiring-out business. Then, if the worst happens, and the business fails, so long as the assets have been transferred correctly, the “tools of your trade” will be safeguarded and the business owners can recommence trading without having to start from scratch.