I believe that by "near-worthless" they mean that a given company is hemorrhaging assets and basically about to fold. A business that continuously runs net nega

I believe that by "near-worthless" they mean that a given company is hemorrhaging assets and basically about to fold. A business that continuously runs net negative has to close at some point without an external influx of capital, after all. The alleged theory goes that since without the help of some fund such a company is going to fold anyways, the fund can't really do much worse than the alternative, so might as well let them have a shot at repairing the business and rescuing it. Sometimes they're successful, sometimes they're not.