What Bankruptcy Means for Stockholders

In the past year alone, household names like Blockbuster, Sbarros and Borders have filed for bankruptcy, the last of which recently announced it would begin the liquidation process. Aside from being a loss to bookworms, the decline of these companies also poses a unique issue for shareholders: What happens to your stock when a company goes bankrupt?

The short answer is that the stock takes a nosedive, though how much of a nosedive ultimately depends on whether the company files for Chapter 11 bankruptcy and successfully restructures, or if it goes bankrupt and ultimately disappears out of business. If it’s the latter, as is the case with Borders, most stockholders can kiss their shares goodbye.

Read the rest of the article from Main Street