If a company declares bankruptcy, what happens to the stock value? and Panty & Stocking

If a company declares bankruptcy, what happens to the stock value?

Does the value of stock become worth NOTHING, or can the stock still hold value, and continue to grow over time?


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Answer by Steve D
Depends on which type of bankruptcy they declare. If they declare Chapter 7 bankruptcy, all assets of the company are gathered, liquidated, debts are paid off and the remainder (if any) is distributed to stock holders. The stock becomes worthless as there is no longer a company.

If the company declares Chapter 11 bankruptcy, that provides them with teh opportunity to restructure, obtain additional financing and continue in business. Under this scenario, it is possible for a company to become successful again, emerge from bankruptcy and the stock hold value and grow.

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