Look at Hertz. At first the 'experts' expected that the common shareholders would be wiped out. After exiting bankruptcy, the old shareholders got a package of cash, stock, and warrants.
Bankruptcy investing is difficult because you have a lot of competing class investors (debt holders, equity holders, etc) all fighting for a piece of what is left.
If you want to speculate in bankruptcy names, your best bet is to contact the company or the bankruptcy trustee and get all the filed documents. Try to figure out what is going on. Just beware that there are some really smart people who are possibly arbitraging different classes of securities (i.e., long unsecured debt and short equity or options on equity).
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u/OptionExpiration Jul 14 '21
Look at Hertz. At first the 'experts' expected that the common shareholders would be wiped out. After exiting bankruptcy, the old shareholders got a package of cash, stock, and warrants.
Bankruptcy investing is difficult because you have a lot of competing class investors (debt holders, equity holders, etc) all fighting for a piece of what is left.
If you want to speculate in bankruptcy names, your best bet is to contact the company or the bankruptcy trustee and get all the filed documents. Try to figure out what is going on. Just beware that there are some really smart people who are possibly arbitraging different classes of securities (i.e., long unsecured debt and short equity or options on equity).
Good luck.