If a company files bancruptcy and goes through re-organization, what happens to the shareholder's equity? Is the stock still viable upon emergence from bancruptcy? i.e. Ford Motor Co. for example.
1 Answer from Attorneys
Re: Corporate Bancruptcy
Generally, shareholders do not do well in Chapter 11 - they are at the bottom of the pile generally behind all creditors. Although there have been exceptions, common shares are usually cancelled without payment or ownership in the re-organized company. It is always surprising to see trading activity in common shares after the bankruptcy is filed, because those shares are almost always worthless.
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