Saw some discussion earlier about the parts of the company not in BK precluding a share cancellation. I don't think it is entirely safe to say that because 55% of the company is not in BK that they cannot wipe out shareholders. Take the Spectrum brands case for example. (Thanks to OAPS222 for bringing this case to my attention.) Their case was another one like ours which involved certain portions of the company in BK and certain portions which were not. In this case equity was completely wiped out, in a plan approved by the court on June 25, 2009. The reason why they were wiped out was because according to their latest 10-Q the assets amounted to about $2 Billion while the debt was right at $3.25 Billion leaving an equity shortfall of $1.25 Billion. In this case, equity was cancelled and new shares were issued to the creditors leaving no distributions for the current shareholders. It would not have mattered if 95% of the company was not involved in BK, that ship was going down because equity was nonexistent.
I do count the fact that 55% of our company is not in BK as a positive but not because it shields us from being wiped out. I believe our positive equity and return to operating profitability will be what protects us on that front. An equity committee will be an important part of our survival and fair treatment as well. What makes the 55% issue important is that 55% of the company can operate without having to receive permission from the court, trustee and creditors for any major decisions made in the normal course of business.
As to the question of who would own the parts of the company not in BK if shares were cancelled, the answer to that would be whomever the new shares were issued to.
I just don't see any reason to keep rehashing the share cancellation issue, at this time. Let's agree to put it to rest until facts and circumstances dictate otherwise. As of now, share cancellation is the furthest thing from my mind. In a worst case scenario we might see some form of dilution, but an outright cancellation would completely ignore the fact that we have positive equity and positive operating income.
Of course all of this is IMO, do your own DD and consult a financial advisor before making important investment decisions. :)
GLTA
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