4 ms·
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 admi
by 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 agoAgree 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.