Thursday, January 9, 2014

Why You Should Never Invest In A Penny Stock Or Low Single Digit Stock Thats In Chapter 11 Bankruptcy'

Now here is another no brainer. In the vast majority of cases companies that are in chapter 11 bankruptcy are a bad investment. Most of the time theirs no equity for the common stock shareholders when and if the company emerges from bankruptcy. Their are some cases when the common stock shareholders receive a token  interest in the company when it emerges from bankruptcy. Maybe 3% of the new shares issued. In a very small number of cases the shareholders receive decent number  of the new shares issueed  Generally speaking when a company comes out of bankruptcy the old shares are canceled and new shares issued. Everyone that owns shares in the company before the bankruptcy is finalized will generally have their shares canceled. That means the shares are worthless. The common stock shareholders are at the end of the line all the other parties in the  bankruptcy are legally entitled to receive equity in the company emerging from bankruptcy ahead of the common stock shareholders. Secured creditors are ahead of unsecured creditors and so on. Thats why its a bad idea to get into a company thats involved in a chapter 11  bankruptcy. And if the chapter 11  bankruptcy is converted into a chapter 7  bankruptcy which is a very common occurrence than theirs almost no chance that the common stock shareholders will receive any compensation. In a chaper 7  bankruptcy the company will not stay intact as a company instead all of the assets of the company different divisions will be sold off to pay off creditors or if the company shuts down land inventory trademarks and so forth  will be sold  to pay off creditors. Best advice stay away from companies trading in chapter 11 bankruptcy

Some Excellent Penny Stock Investing Resources

Penny Stock Investing Newsletter

Manhattan Calumet Value Stock Hotline 

Red Chip Companies

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