Question
What happens to stock in bankruptcy?
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5th Nov 2009 by Daniel Cross, ChFC
When a publicly traded company declares bankruptcy, its stock is rendered worthless. Bond holders will be the first to be paid out, then preferred stock, and finally common stock holders. Generally there isn't enough money to reach all the way to the common stock level which makes them valueless assets. A company can restructure through bankruptcy and issue new stock, but they are separate securities entirely.
When a publicly traded company declares bankruptcy, its stock is rendered worthless. Bond holders will be the first to be paid out, then preferred stock, and finally common stock holders. Generally there isn't enough money to reach all the way to the common stock level which makes them valueless assets. A company can restructure through bankruptcy and issue new stock, but they are separate securities entirely.
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27th Oct 2009 In Stocks
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