13 ms·

Question: Have there been bankruptcies where shareholders aren't wiped out, other than government meddling? How much do shareholders who aren't wiped out typica

Question: Have there been bankruptcies where shareholders aren't wiped out, other than government meddling? How much do shareholders who aren't wiped out typically get?

celticninja 6y ago
I imagine that if you had enough to pay back one shareholder in a bankruptcy, then you would not go bankrupt. The only way shareholders get anything is if all other creditors get paid in full first. If you can do that then you are not bankrupt.
goodcanadian 6y ago
Yes, sort of. If the company is wound down, the shareholders are unlikely to get anything. However, companies are usually worth more as a going concern, so administrators will try to restructure the debt to allow the company to come out of bankruptcy. In that case, shareholders still own their shares though they are likely to be highly diluted; debt holders may only be willing to restructure in exchange for equity, for example.
- danielisaac 6y ago
  Agree with the above. There are also cases in which secured or unsecured creditors will vote for a Chapter 11 reorganization plan to give something to equity holders--even in violation of typical absolute priority--if it helps get the plan approved quickly. Equity holders might also keep their shares if there's "new value" added to the reorganized company (the controlling case is Bank of America v. 203 North LaSalle Street Partnership). There are a handful of other instances, but none are especially common.
sgerenser 6y ago
During American Airlines 2011 bankruptcy and subsequent merger with US Airways. Creditors ended up getting paid in full and people who bought the stock for a few pennies made 40x on their investment. https://www.wsj.com/articles/shares-of-bankrupt-american-airlines-go-sky-high-1386117530 https://www.wsj.com/articles/shares-of-bankrupt-american-air...

13 ms·

Question: Have there been bankruptcies where shareholders aren't wiped out, other than government meddling? How much do shareholders who aren't wiped out typica

by arpinum 6y ago

Question: Have there been bankruptcies where shareholders aren't wiped out, other than government meddling? How much do shareholders who aren't wiped out typically get?

celticninja 6y ago
I imagine that if you had enough to pay back one shareholder in a bankruptcy, then you would not go bankrupt. The only way shareholders get anything is if all other creditors get paid in full first. If you can do that then you are not bankrupt.
goodcanadian 6y ago
Yes, sort of. If the company is wound down, the shareholders are unlikely to get anything. However, companies are usually worth more as a going concern, so administrators will try to restructure the debt to allow the company to come out of bankruptcy. In that case, shareholders still own their shares though they are likely to be highly diluted; debt holders may only be willing to restructure in exchange for equity, for example.
- danielisaac 6y ago
  Agree with the above. There are also cases in which secured or unsecured creditors will vote for a Chapter 11 reorganization plan to give something to equity holders--even in violation of typical absolute priority--if it helps get the plan approved quickly. Equity holders might also keep their shares if there's "new value" added to the reorganized company (the controlling case is Bank of America v. 203 North LaSalle Street Partnership). There are a handful of other instances, but none are especially common.
sgerenser 6y ago
During American Airlines 2011 bankruptcy and subsequent merger with US Airways. Creditors ended up getting paid in full and people who bought the stock for a few pennies made 40x on their investment. https://www.wsj.com/articles/shares-of-bankrupt-american-airlines-go-sky-high-1386117530 https://www.wsj.com/articles/shares-of-bankrupt-american-air...