Airline Stocks

[cleinen]

What happens when airline stocks like Delta and Northwest come out of bankruptcy? How do they decide how shares get reissued if that's what they do?

[pig4bill]

By the agreements reached in court. Usually the debtholders divide up the shares by how much they are owed. In practice, the bondholders get the stock. The holders of the old stock get squadoosh.

[NajdorfDefense]

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By the agreements reached in court. Usually the debtholders divide up the shares by how much they are owed. In practice, the bondholders get the stock. The holders of the old stock get squadoosh.

[/ QUOTE ]

Courts normally give old equity holders a tiny slice, or warrants in the new firm, but definitely not always, depends how deep in the hole the firm was.

[dazraf69]

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What happens when airline stocks like Delta and Northwest come out of bankruptcy?

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Everyone shorts them and makes mucho bucks
[img]/images/graemlins/grin.gif[/img] ( sarcasm so please do not go and short the airlines, but seriously they will have a high short %)

[pig4bill]

[ QUOTE ]
[ QUOTE ]
By the agreements reached in court. Usually the debtholders divide up the shares by how much they are owed. In practice, the bondholders get the stock. The holders of the old stock get squadoosh.

[/ QUOTE ]

Courts normally give old equity holders a tiny slice, or warrants in the new firm, but definitely not always, depends how deep in the hole the firm was.

[/ QUOTE ]

It's been years since I've seen this happen. Got any recent examples?

In this case, it's not going to happen. Delta and Northwest were in debt up past their eyeballs.

[PilotMatt]

Delta came out and said in mid-march that their "DALRQ" stock would be worthless upon coming out in the end of April. They actually came out on the 30th and last i saw it trade for was .018/share.