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If the company goes into liquidation before the short seller closes their position, what happens?
by antihipocrat 4y ago
If the company goes into liquidation before the short seller closes their position, what happens?
- dgacmu 4y agoYou win but you may get stuck paying the borrow costs still for a while until either the stock is tradable or whatever happens with the resolution of the bankruptcy settles out (the residual shares potentially have _some_ value). In practice, before that, your broker or whomever you borrowed the shares from will probably just declare it a loss and close it out. They'll then get a little something from the bankruptcy, maybe. That's assuming a traditional short, and not something like selling naked calls. In the latter case they just expire worthless.