What happens to the shareholder when public company declare bankruptcy?
If you are a shareholder of a public company and the company goes bankrupt, what would happen to your share?
Does the share still represent your holding in the company? And if the company goes out of business, are you held accountable for the debt that company needs to pay?
If the share does not go to zero, is there a chance that share value will return to original price after bankruptcy?
stocks bankruptcy
edited 3 hours ago
Bob Baerker
15.3k11948
asked 3 hours ago
loggerlogger
1195
add a comment |
If you are a shareholder of a public company and the company goes bankrupt, what would happen to your share?
Does the share still represent your holding in the company? And if the company goes out of business, are you held accountable for the debt that company needs to pay?
If the share does not go to zero, is there a chance that share value will return to original price after bankruptcy?
stocks bankruptcy
edited 3 hours ago
Bob Baerker
15.3k11948
asked 3 hours ago
loggerlogger
1195
add a comment |
If you are a shareholder of a public company and the company goes bankrupt, what would happen to your share?
Does the share still represent your holding in the company? And if the company goes out of business, are you held accountable for the debt that company needs to pay?
If the share does not go to zero, is there a chance that share value will return to original price after bankruptcy?
stocks bankruptcy
edited 3 hours ago
Bob Baerker
15.3k11948
asked 3 hours ago
loggerlogger
1195
If you are a shareholder of a public company and the company goes bankrupt, what would happen to your share?
Does the share still represent your holding in the company? And if the company goes out of business, are you held accountable for the debt that company needs to pay?
If the share does not go to zero, is there a chance that share value will return to original price after bankruptcy?
stocks bankruptcy
stocks bankruptcy
edited 3 hours ago
Bob Baerker
15.3k11948
asked 3 hours ago
loggerlogger
1195
edited 3 hours ago
Bob Baerker
15.3k11948
asked 3 hours ago
loggerlogger
1195
edited 3 hours ago
Bob Baerker
15.3k11948
edited 3 hours ago
Bob Baerker
15.3k11948
edited 3 hours ago
Bob Baerker
15.3k11948
15.3k11948
asked 3 hours ago
loggerlogger
1195
asked 3 hours ago
loggerlogger
1195
asked 3 hours ago
loggerlogger
1195
1195
add a comment |
add a comment |
2 Answers
2
active
oldest
votes
Under Chapter 11 Bankruptcy Code, the company attempts to reorganize its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court.
Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to liquidate all assets and the money is used to pay off the debt. Secured creditors are paid first. Owners are last in line to be repaid. Bankruptcy laws determine the order of payment.
As a shareholder, you have no responsibility for company debt.
If the company reorganizes, there's always a chance that share price recovers but that's a long odds bet.
answered 2 hours ago
Bob BaerkerBob Baerker
15.3k11948
so ultimately the share value goes to 0 if company bankrupts? on chapter 7
– logger
2 hours ago
@logger and usually chapter 11. Usually, a company's existing shares do not reemerge from bankruptcy.
– quid
2 hours ago
@logger It's important to note that the shares do not "go away" under a Chapter 11. If you owned 100 shares of Bankruptcy Inc (ticker BKRP) and it files Chapter 11, you still own 100 shares - but they are basically worthless. In fact, the ticker is usually changed to something like BKRP.NWA. In the event the company emerges from Chapter 11 it will likely have newly-issued stock under (say) BKINC, but some people might still try to sell the old BKRP.NWA - and some people might buy it even though it's no longer "attached to" Bankruptcy Inc. Look at GM in 2009 as one example.
– Istanari
2 hours ago
add a comment |
In a company re-organization the company stock is usually wiped-out.
Then the senior debt holders, in addition to current business creditors, likely or often become the new stockholders.
And so as a company gets into trouble, the senior debt holders can short the stock while holding the debt. The gain on the short stock can be much larger than the loss on the senior debt because the senior debt does have significant value in a the re-organization.
answered 47 mins ago
S SpringS Spring
3943
add a comment |
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2 Answers
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2 Answers
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Under Chapter 11 Bankruptcy Code, the company attempts to reorganize its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court.
Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to liquidate all assets and the money is used to pay off the debt. Secured creditors are paid first. Owners are last in line to be repaid. Bankruptcy laws determine the order of payment.
As a shareholder, you have no responsibility for company debt.
If the company reorganizes, there's always a chance that share price recovers but that's a long odds bet.
answered 2 hours ago
Bob BaerkerBob Baerker
15.3k11948
so ultimately the share value goes to 0 if company bankrupts? on chapter 7
– logger
2 hours ago
@logger and usually chapter 11. Usually, a company's existing shares do not reemerge from bankruptcy.
– quid
2 hours ago
@logger It's important to note that the shares do not "go away" under a Chapter 11. If you owned 100 shares of Bankruptcy Inc (ticker BKRP) and it files Chapter 11, you still own 100 shares - but they are basically worthless. In fact, the ticker is usually changed to something like BKRP.NWA. In the event the company emerges from Chapter 11 it will likely have newly-issued stock under (say) BKINC, but some people might still try to sell the old BKRP.NWA - and some people might buy it even though it's no longer "attached to" Bankruptcy Inc. Look at GM in 2009 as one example.
– Istanari
2 hours ago
add a comment |
Under Chapter 11 Bankruptcy Code, the company attempts to reorganize its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court.
Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to liquidate all assets and the money is used to pay off the debt. Secured creditors are paid first. Owners are last in line to be repaid. Bankruptcy laws determine the order of payment.
As a shareholder, you have no responsibility for company debt.
If the company reorganizes, there's always a chance that share price recovers but that's a long odds bet.
answered 2 hours ago
Bob BaerkerBob Baerker
15.3k11948
so ultimately the share value goes to 0 if company bankrupts? on chapter 7
– logger
2 hours ago
@logger and usually chapter 11. Usually, a company's existing shares do not reemerge from bankruptcy.
– quid
2 hours ago
@logger It's important to note that the shares do not "go away" under a Chapter 11. If you owned 100 shares of Bankruptcy Inc (ticker BKRP) and it files Chapter 11, you still own 100 shares - but they are basically worthless. In fact, the ticker is usually changed to something like BKRP.NWA. In the event the company emerges from Chapter 11 it will likely have newly-issued stock under (say) BKINC, but some people might still try to sell the old BKRP.NWA - and some people might buy it even though it's no longer "attached to" Bankruptcy Inc. Look at GM in 2009 as one example.
– Istanari
2 hours ago
add a comment |
Under Chapter 11 Bankruptcy Code, the company attempts to reorganize its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court.
Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to liquidate all assets and the money is used to pay off the debt. Secured creditors are paid first. Owners are last in line to be repaid. Bankruptcy laws determine the order of payment.
As a shareholder, you have no responsibility for company debt.
If the company reorganizes, there's always a chance that share price recovers but that's a long odds bet.
answered 2 hours ago
Bob BaerkerBob Baerker
15.3k11948
Under Chapter 11 Bankruptcy Code, the company attempts to reorganize its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court.
Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to liquidate all assets and the money is used to pay off the debt. Secured creditors are paid first. Owners are last in line to be repaid. Bankruptcy laws determine the order of payment.
As a shareholder, you have no responsibility for company debt.
If the company reorganizes, there's always a chance that share price recovers but that's a long odds bet.
answered 2 hours ago
Bob BaerkerBob Baerker
15.3k11948
answered 2 hours ago
Bob BaerkerBob Baerker
15.3k11948
answered 2 hours ago
Bob BaerkerBob Baerker
15.3k11948
answered 2 hours ago
Bob BaerkerBob Baerker
15.3k11948
15.3k11948
so ultimately the share value goes to 0 if company bankrupts? on chapter 7
– logger
2 hours ago
@logger and usually chapter 11. Usually, a company's existing shares do not reemerge from bankruptcy.
– quid
2 hours ago
@logger It's important to note that the shares do not "go away" under a Chapter 11. If you owned 100 shares of Bankruptcy Inc (ticker BKRP) and it files Chapter 11, you still own 100 shares - but they are basically worthless. In fact, the ticker is usually changed to something like BKRP.NWA. In the event the company emerges from Chapter 11 it will likely have newly-issued stock under (say) BKINC, but some people might still try to sell the old BKRP.NWA - and some people might buy it even though it's no longer "attached to" Bankruptcy Inc. Look at GM in 2009 as one example.
– Istanari
2 hours ago
add a comment |
so ultimately the share value goes to 0 if company bankrupts? on chapter 7
– logger
2 hours ago
@logger and usually chapter 11. Usually, a company's existing shares do not reemerge from bankruptcy.
– quid
2 hours ago
@logger It's important to note that the shares do not "go away" under a Chapter 11. If you owned 100 shares of Bankruptcy Inc (ticker BKRP) and it files Chapter 11, you still own 100 shares - but they are basically worthless. In fact, the ticker is usually changed to something like BKRP.NWA. In the event the company emerges from Chapter 11 it will likely have newly-issued stock under (say) BKINC, but some people might still try to sell the old BKRP.NWA - and some people might buy it even though it's no longer "attached to" Bankruptcy Inc. Look at GM in 2009 as one example.
– Istanari
2 hours ago
so ultimately the share value goes to 0 if company bankrupts? on chapter 7
– logger
2 hours ago
so ultimately the share value goes to 0 if company bankrupts? on chapter 7
– logger
2 hours ago
@logger and usually chapter 11. Usually, a company's existing shares do not reemerge from bankruptcy.
– quid
2 hours ago
@logger and usually chapter 11. Usually, a company's existing shares do not reemerge from bankruptcy.
– quid
2 hours ago
@logger It's important to note that the shares do not "go away" under a Chapter 11. If you owned 100 shares of Bankruptcy Inc (ticker BKRP) and it files Chapter 11, you still own 100 shares - but they are basically worthless. In fact, the ticker is usually changed to something like BKRP.NWA. In the event the company emerges from Chapter 11 it will likely have newly-issued stock under (say) BKINC, but some people might still try to sell the old BKRP.NWA - and some people might buy it even though it's no longer "attached to" Bankruptcy Inc. Look at GM in 2009 as one example.
– Istanari
2 hours ago
@logger It's important to note that the shares do not "go away" under a Chapter 11. If you owned 100 shares of Bankruptcy Inc (ticker BKRP) and it files Chapter 11, you still own 100 shares - but they are basically worthless. In fact, the ticker is usually changed to something like BKRP.NWA. In the event the company emerges from Chapter 11 it will likely have newly-issued stock under (say) BKINC, but some people might still try to sell the old BKRP.NWA - and some people might buy it even though it's no longer "attached to" Bankruptcy Inc. Look at GM in 2009 as one example.
– Istanari
2 hours ago
add a comment |
In a company re-organization the company stock is usually wiped-out.
Then the senior debt holders, in addition to current business creditors, likely or often become the new stockholders.
And so as a company gets into trouble, the senior debt holders can short the stock while holding the debt. The gain on the short stock can be much larger than the loss on the senior debt because the senior debt does have significant value in a the re-organization.
answered 47 mins ago
S SpringS Spring
3943
add a comment |
In a company re-organization the company stock is usually wiped-out.
Then the senior debt holders, in addition to current business creditors, likely or often become the new stockholders.
And so as a company gets into trouble, the senior debt holders can short the stock while holding the debt. The gain on the short stock can be much larger than the loss on the senior debt because the senior debt does have significant value in a the re-organization.
answered 47 mins ago
S SpringS Spring
3943
add a comment |
In a company re-organization the company stock is usually wiped-out.
Then the senior debt holders, in addition to current business creditors, likely or often become the new stockholders.
And so as a company gets into trouble, the senior debt holders can short the stock while holding the debt. The gain on the short stock can be much larger than the loss on the senior debt because the senior debt does have significant value in a the re-organization.
answered 47 mins ago
S SpringS Spring
3943
In a company re-organization the company stock is usually wiped-out.
Then the senior debt holders, in addition to current business creditors, likely or often become the new stockholders.
And so as a company gets into trouble, the senior debt holders can short the stock while holding the debt. The gain on the short stock can be much larger than the loss on the senior debt because the senior debt does have significant value in a the re-organization.
answered 47 mins ago
S SpringS Spring
3943
edited 36 mins ago
answered 47 mins ago
S SpringS Spring
3943
answered 47 mins ago
S SpringS Spring
3943
answered 47 mins ago
S SpringS Spring
3943
3943
add a comment |
add a comment |
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