Please help clear confusion on bankruptcy??

[dazraf69]

I need some help in clearing something up in regards to bankruptcy. One way that individuals make profit on bankrupt stock is buy buying it at its already low stock and then selling it when good news is released making anywhere between 10 to 20%. What I am confused about is what happens to the stock if it is reported that the company is moving out of bankruptcy? I was under the impression that the stock would shoot upwards but from this article it sounds that new stock is distributed, hence making the previous stock worthless. The idea being top sell before they emerge?Can someone please clarify this to me?

Any help is appreciated.....


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