Re: Bankruptcy Protection Stock Becomes?
What happens a lot of times is the company can no longer meet its debt obligations. Bond holders get their bonds converted to shares of the new common stock which is worth less than the bonds were. This allows the company to keep operating and come out of bankruptcy in financial health. However, the old stock holders are out in the cold. I think it's called Debt to Equity conversion. The new stock sometimes does quite well, but you're out of luck.
Sometimes they will get bought out for cash while in bankruptcy. The cash usually goes to pay the creditors and bondholders at pennies on the dollar with nothing going to the stockholders.
Sometimes they need protection from creditors to keep operating. They may be able to renegotiate with their creditors and come back out of bankruptcy with the stockholders bruised but still somewhat intact. Sounds like that's a longshot in this case.
PairTheBoard
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