When a publicly listed company ceases operations and goes into liquidation, the company’s shareholders may be entitled to a portion of the assets, depending on the type of shares they hold. However, the stock itself is usually worthless.
The owners of common stock shares are last in line for a share of the firm’s liquidated assets, so the hope is a faint one.
Key Takeaways
- If a company declares Chapter 11 bankruptcy, it is asking for a chance to reorganize and recover. If the company survives, your shares may, too, or the company may cancel existing shares, making yours worthless.
- If the company declares Chapter 7, the company is dead, and so are your shares.
- Owners of common stock often get nothing when a company…