What does limited liability mean here

What does limited liability mean here

Lazy banking throttles entrepreneurship.
A bankruptcy court has reportedly ruled that a promoter cannot escape liquidation of her personal assets by simply filing for bankruptcy. Going after the personal assets of a promoter is flagrant violation of the principle of limited liability. It throttles entrepreneurship, especially for small businesses. The Insolvency and Bankruptcy Code provides a moratorium on all legal proceedings -for a finite window -till the completion of the resolution process. The failure to arrive at a resolution would entail liquidation of the company. Rightly, the law upholds the principle of limited liability: it allows only the attachment of assets of the company under liquidation, and not the assets of the promoters. However, the court, while admitting a voluntary bankruptcy petition of Schweitzer Systemtek, observed that the promoters had pledged their assets to the borrower. This could be valid on technical grounds. But it reflects a systemic bias against risk-taking and entrepreneurship.
The Companies Act seeks to safe guard the principle of limited liability, albeit only for a small class of share holders -those who incorporate the “single person company”. Only the equity of the promoter is at risk. This should be the case for all promoters.
There should be no personal liability on promoters beyond risk capital that they have invested in the company. It is absurd that an entrepreneur has to risk her family's future to secure a loan. However, banks, backed by the RBI, insist on personal guarantees to check the tendency of promoters to exploit legal delays. The regulator's rules on strategic debt restructuring say that the general principle of restructuring should be that the shareholders bear the first loss rather than the lenders. Personal guarantees and commitments obtained from promoters should also cover losses incurred by lenders.
So, banks have been asked to devise appropriate ways to invoke or release personal guarantees based on the principle of reasonable satisfaction of lenders' claims. With banks now using the bankruptcy code, the case for them to dispense with personal guarantees is compelling.