What happens to the stock owners of a Ch.11 bankrupt company if the company is bought out by another company?
What happens to the stock owners of a Ch.11 bankrupt company if the company is bought out by another company? I own shares of a company that recently went into Ch.11 bankruptcy, and now I hear rumors of a possible buyout? What would happen to my shares if this happened?
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In most cases, a ch 11 company has more debts than assets. The creditors generally receive stock in the reorganized company as payment for their debts. (Banks suppliers etc). The stock they received basically was created by taking it away from you. Common shareholders are always the last to get any payment for their holdings. If the creditors arent paid in full, (and they rarely are), then the old stockholders shares are worthless.
Your shares will be wiped out and then you would receive nothing OR you may get some money for your shares OR your shares could be converted into shares of the acquiring company.
They might just be buying the assets in the bankruptcy court. In which case the equity would most likely will still be worthless and you would get nothing. Or they might have a plan to recapitalize the company and you might get something for your shares, but probably not much.
Simply put, after all the legal stuff and back and forth the lawyers will get paid, you will get nothing.