pls explain
2006-07-13 07:00:39 · 5 answers · asked by Anonymous in Business & Finance ➔ Investing
read as examples and not exaples
2006-07-13 07:09:09 · update #1
A company files for Chapter 11 when they are not longer able to pay their bills. So they go bankrupt. Yes you could invest in these companies, infact some companies after going bankrupt and their stock going from $20 to $4 sky rocket to $70, but this is like winning the lottery. So you should not invest in these company unless you have done your research really well.
2006-07-13 07:07:24 · answer #1 · answered by Richie 1 · 0⤊ 0⤋
MJL613 gives an excellent answer to the first part of your question.
As to the second -- sure, you can invest in a bankrupt company. If it is publicly traded, then the price of their stock will be depressed. The prices of their bonds will also be depressed.
This is due to the uncertainty about what will happen. It is possible that the shareholders will get nothing. However, most Chapter 11 companies emerge from bankruptcy after 19-22 months. The new firm is restructured. Old shareholders often get a small piece of the company. Bondholders usually get an equity stake and may get new bonds. Sometimes the old bonds are kept, and interest is paid in arrears.
I've included a link to a site that talks about hedge funds investing in distressed companies.
2006-07-13 16:58:39 · answer #2 · answered by Ranto 7 · 0⤊ 0⤋
Chapter 11 is a type of bankruptcy. Chapter 11 is when a company goes through a reorganization. A "Trustee" who is appointed by the federal government will liquidate the companies assets and pay off any debts.
Chapter 7 is complete and total liquidation of all assets.
Chapter 13 is a "reoganization" of sorts for an individual. A trustee will try to make deals with your creditors for you to pay what you owe at a lower interest rate or to pay a portion of what you owe. This is called your "Plan." You then pay monthly payments to the trustee who distributes money to your creditors based on the Plan.
2006-07-13 14:08:46 · answer #3 · answered by MJL613 3 · 0⤊ 0⤋
Filing chapter 11 means filing bankruptcy.
2006-07-13 14:04:28 · answer #4 · answered by Cathy 2 · 0⤊ 0⤋
chapter 11 is a bankruptcy not an investment.
2006-07-13 14:03:51 · answer #5 · answered by o2bamy25 3 · 0⤊ 0⤋