Debt and Bankruptcy
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What happens to stockholders when a company files for bankruptcy if they are then merged with an active company?

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2011-05-13 08:12:35
2011-05-13 08:12:35

Most times in bankruptcy, the stock continues to trade on the open market, assuming it is already publicly traded. It is only when the company closes shop that the shareholders MAY be out of luck. Common stock is lowest on the totem pole of paybacks. In other words, when a publicly traded company goes out of business, it's assets are sold and distributed to all creditors (including bond-holders) before the stockholders (owners of the company) get any money back. Most likely, however, there's nothing left to be distributed. This is why it's important to evaluate what you're buying very carefully before the purchase is made. Also, know when you are going to sell and then sell it, ie, stock price gets up to (or down to) a certain price. Most people don't lose money in the market because they don't know WHAT to BUY...rather because they don't know WHEN to SELL.

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