if they go bankrupt what happen to the shares
Answers
318 points
TBone answered 7 months ago …
The debt holders will most likely take over the company and the shareholders will have very little stock left (pennies on the dollar). Look at what happened to K-Mart when they went under.
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2082 points
alanj answered 7 months ago …
It depends on what type of bankruptcy you mean. If it's chapter 7 then those shares will be practically worthless and never will be worth anything. If you mean chapter 11, which is what everyone who has been talking about GM filing for bankruptcy mean, then GM will re-organize and over time if they do good and start turning a profit again then those shares will also increase in value.
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989 points
rvilmur answered 7 months ago …
The stockholders can be wiped out even in a chapter 11 bankruptcy. Generally to survive a company will need a major portion of the debt to be converted into capital shares. This will be a huge dilution to existing shareholders. Also expect a large ratio reverse split if the old shares are given anything at all. The bondholders may insist that all the old stock be wiped out and only new shares be issued to them to compensate for the forgiveness of the debt. Shareholders have NO power in a bankruptcy; so expect nothing.
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