BioRestorative Therapies Inc (BRTX)

[trader59]

No, that is false. He only bid on the assets of the company, and the company remains responsible for the debt. This company’s assets are going to be liquidated one way or another. His bid for the assets is considered a “stalking horse” and is the minimum amount the company will receive. They’re going through a bidding process to see if another person/company will bid more, but they’ll all be aware of his offer. Even if a higher offer is received, it is very unlikely to be sufficient to pay off the debt and give shareholders any hope of a recovery.

This notion that the company is no longer responsible for any debt is completely wrong. Bankruptcy proceedings do offer a debtor protection from its creditors, but it also protects those creditors by getting them the best deal possible considering the company’s financial condition. Sometimes in chapter 11, the company will bring a plan to improve their operations and have a shot at repaying more of the debt, and the creditors will agree to restructure their loan arrangements to help them do that. Sometimes the company can’t do that and rather than tossing more money into the pit, the creditors will move for the assets to be sold off to repay as much debt as possible.

In this case it is clear, the assets are being sold, the value won’t come close to paying the debt, and the shareholders will get nothing. It only takes 1 reading of the 8K to see that, especially when the company says it directly.