what happens to my stock if a company goes bankrupt?
May 23rd, 2010
If I invest in a company, and they go bankrupt, I only lose the money I invested in and no more, right? Thanks.
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Most likely to lose all the money that u paid to buy the stock. You may get pennies on the dollar after all the debt has been paid off but that may be years down the road.
Yes, you risk only what you paid for the stock. You aren’t held personally responsible for the company’s liabilities or anything if that’s what you’re concerned about.
Yup, just what you put into it. Try not to buy stocks that you think will go bankrupt. That would be bad.
The above answers are all correct. Here is a little more info. that you may not be aware of.
When a company goes bankrupt, some investors do have legal rights to the assets of the company. These rights are prioritized according to the "seniority" of the security.
The bond holder is most senior and those investors are the ones that can initiate court bankruptcy proceedings when the company fails to make its bond payments.
Next in line is the preferred stock holder. They are entitled to the assets that remain after the bond holders are satisfied.
The common stock holder is last in line, and usually nothing in the way of assets are left for them.