What Happens to Stocks in a Bankruptcy

Filing for chapter 11 bankruptcy protection simply means that a company is on the verge of bankruptcy, but believes that it can once again become successful if it is given an opportunity to reorganize its assets, debts and business affairs. Although the chapter 11 reorganization process is complex and expensive, most companies, if given the choice, prefer chapter 11 to other bankruptcy provisions such as chapter 7 and chapter 13, which cease company operations and lead to the total liquidation of assets to creditors.
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When a company files for Chapter 11 bankruptcy, the management of the company is still in charge of the daily operations. That said, significant business decisions, especially those pertaining to debt or debt securities, are sent to the bankruptcy court for approval.
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What happens when a public company files for protection under the federal bankruptcy laws? Who protects the interests of investors? Do the old securities have any
Tags: Chapter 11 and Other Reorganizations, Chapter 13 Bankruptcy, Bankruptcy

Whether stock or bond holders receive any money from bankruptcy proceeds depends on several factors.

What happens to your stock or bonds when a company goes bankrupt?

Have you ever wondered what happens if a stock you owns goes bankrupt? Will you owe money? What happens to your holdings? Get the answers to these often asked, but rarely answered, questions.