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BGGS- what happens to stock price when it comes out of bankruptcy?
Posted on 9/30/20 at 9:05 am
Posted on 9/30/20 at 9:05 am
Wanted some insight as to what happens to a stock price when it comes out of bankruptcy. For example...Briggs & Stratton. Currently they have a “Q” behind their ticker symbol meaning they are still in bankruptcy. Stock is trading around $.25/share. When they come out of bankruptcy, what happens to the stock if you own some shares? Will these “bankruptcy shares” go away, and new stock be issued or will these shares be valid? Thanks for any input.
Posted on 9/30/20 at 10:05 am to jerre1010
I know nothing about the situation with this particular company. Chapter 7 or Chapter 11? Big difference. But generally speaking, buying common shares in bankrupt companies is typically not a good idea. It really depends on what happens with more senior equity (meaning preferred stock) and bond holders. They get paid out first. Whatever crumbs may be left over, the common holders *may* get. But yes, many times the old common is wiped out and new shares are issued - as was the case with GM and many others over the years.
As an aside, instead of buying common shares, if you're going to play in this space, the bonds tend to be a less risky (and more profitable) way to go. But for some odd reason, retail people usually don't do that. They buy the "Q" common shares and then wonder why they end up losing all their money, even when company exits bankruptcy.
Tread carefully and do a LOT of research.
As an aside, instead of buying common shares, if you're going to play in this space, the bonds tend to be a less risky (and more profitable) way to go. But for some odd reason, retail people usually don't do that. They buy the "Q" common shares and then wonder why they end up losing all their money, even when company exits bankruptcy.
Tread carefully and do a LOT of research.
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