I've been always wondering - what does happen if person who borrowed money, or company which took a loan - stopped to exist.

I think this depends on the country. Normally it goes into the whole package of inheritance. Before any inheritance is distributed, the loans are deducted and paid back. The Kids can then decide to accept or not their inheritance. Normally the bank will have the paper of the house and it can sell the house to cover the loan.

Thanks a lot for your comment my friend,

Achim