Lets say I bought 500 shares of some Delphi stock for 0.125 a peice. What happens when they emerge from being bankrupt? Do I actually get a gain when the price shoots up?
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Why shares of bankrupt companies usually go bad - MarketWatch"It's very unlikely that a company will come out of bankruptcy without canceling its shares, especially if they have filed a reorganization plan saying that's what they intend to do," said John Nestor, director of public affairs at the Securities and Exchange Commission.
Delta shares now trade at about $1.02 a share, down from $1.15 at the start of the month, with up to as many as 14 million shares trading hands on a single day this year.
They could amount to nothing if its bankruptcy reorganization plan, filed with the court in mid-December, is approved. Its plan says "current holders of Delta stock will receive no distribution of new Delta stock" and their securities will be canceled when the plan is complete.
Stock from bankrupt company worthless :: CHICAGO SUN-TIMES :: Savage Q & AQ:I am considering purchasing MCI-World Com shares even though the company might file bankruptcy. I'm willing to hold on to the shares for five to seven years. If I purchased the shares now what will happen with them if the company declares bankruptcy. Will the shares become null and void? Also, if a company purchases a bankrupt MCI-World Com could the shares regain value?
A: If the company goes bankrupt, the shares are worthless. Someone may buy the bonds and make money, but not with the common shares. This is not "cheap" stock. This is probably worthless stock. It's as long a shot as the lotto.
The Plan provides for a recovery through a plan distribution of reorganized Delphi common stock and cash amounting to the principal amount of the claim plus accrued interest at a negotiated plan value for general unsecured creditors, and agreed upon distributions to other classes of creditors and interests. GM will receive a $2.7 billion cash distribution in satisfaction of certain of its claims against Delphi. As part of the settlement of the multidistrict ERISA and securities litigation, distributions will be made under three plan classes using plan currency in the same form, ratio, and treatment as what will be used to satisfy the holders of general unsecured claims. Allowed claims and interests for these three plan classes total $24.5 million for the ERISA plan class and a total of $204 million for the debt securities class and the common stock securities class. Holders of existing Delphi common stock will receive a distribution of shares of reorganized Delphi, five-year warrants exercisable to purchase shares of reorganized Delphi, and transferable and non-transferable subscription rights to purchase shares of reorganized Delphi.
i don't know how many outstanding shares they had but this $204Mil probably equals .05 cents cash per stock$204 million for the debt securities class and the common stock securities class.