Buying Stock In Bankrupt Companies Link

Bankruptcy courts follow an "absolute priority rule" when distributing remaining assets. Common stockholders are at the bottom of this hierarchy: : Banks or lenders with collateral. Unsecured Creditors : Bondholders, suppliers, and employees.

Buying stock in companies that have filed for bankruptcy is a high-risk strategy that often results in a total loss of investment. While there is no federal law prohibiting the trading of these securities, the legal priority of claims usually leaves common shareholders with little to nothing. buying stock in bankrupt companies

: Delisted shares migrate to over-the-counter (OTC) markets, such as the OTC Bulletin Board or Pink Sheets. Bankruptcy courts follow an "absolute priority rule" when