Looneytown

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mpelchat's picture
mpelchat
Status: Silver Member (Offline)
Joined: Sep 10 2008
Posts: 214
Looneytown

Can anybody tell me how a company that has declared bankruptcy and the common stock will be thrown out has it's stock start the day on wall-street at $0.52 and goes to $0.85 ((as of when this was written).

The market ticker has this to say about this thing as well.

http://market-ticker.denninger.net/archives/1077-We-Are-In-Looneyville.html

What next? How bout using stock roulette? This is nuts.

jerrydon10's picture
jerrydon10
Status: Gold Member (Offline)
Joined: Mar 2 2009
Posts: 442
Re: Looneytown
mpelchat wrote:

What next? How bout using stock roulette? This is nuts.

I think there are people who believe they will sucessfully reorganize under Chapter 11.

Now that they have officially filed, they can get around legal hurtles they could not have before. One example is that they are now exempt from state franchise laws.

From what I have read, I gather that as of today there are now 2 GMs. One, a company expected to survive and maybe even thrive; the other now containing all of their toxic assets, slow moving products, etc. which they will dump.

How that affects common stock, I would have no idea.

 

mpelchat's picture
mpelchat
Status: Silver Member (Offline)
Joined: Sep 10 2008
Posts: 214
Re: Looneytown

There is a chance of this happening, but the odds are not good.  Common stock holders are the last to be paid and have no guarantees to get new stock or how much and even if they do it is at the mercy of the courts.  The bond holders and stock holders can vote down a plan for reconstruction but the courts can override it if they "feel" the plan is "fair" for all. 

I would not want to be putting my hard earned money in that mess, and to see stocks go up by approx. 60%  in one day for failing is a bit out there in my opinion.

Here is some interesting information on bankruptcies if you are interested and these days it may not be bad to learn about these things.

http://www.financialbrowsers.com/articles/Bankruptcy.htm

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: Looneytown

Amazing what green shoots can do LOL really it is more about short covering.

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