One of the reasons that business owners take out liability insurance is to protect themselves from financial ruin if they get sued. These policies don't cover every potential concern, though. Even if they were to do so, damages are capped. While the likelihood that a company will be sued varies depending on the industry that they operate within, there are some common reasons that many businesses end up facing lawsuits.
Just like individuals swimming in debt may choose to file for bankruptcy as a way to alleviate their financial pressures, businesses often do the same. They may file for Chapter 7, 11 or 13 bankruptcy depending on how they're incorporated, the assets and debts they have and whether they're looking to remain in business.