DigitalTown, Inc. (DGTW)

[trader59]

Yes, the shareholders own equity in the company, but they are not responsible for the debt. Neither did they file for the bankruptcy, and didn't even get a vote. Know why? Because Sam had the controlling votes of the company.

Shareholders are the last ones in line to be paid out of the proceeds of the liquidation since they took the least risk. Secured creditors (don't recall if there are any) that have collateral in the assets get paid first (but after the lender that funded the operations through the bankruptcy proceedings), then unsecured creditors, then any preferred shareholders, then common shareholders. Considering the debt and the company's statement of near zero asset value, the creditors will get very little and the shareholders will get zero.

And, yes, the creditors usually get screwed in a bankruptcy, and shareholders always get screwed. If a real plan were put forth to reorganize and recapitalize the company, the existing stock would be cancelled or, at best would get a small piece of the new equity issued to fund the reorganized company.

That's just how it works, and to the other poster who asked if I'd bought, absolutely not. It is foolish to invest in a company while it is in bankruptcy proceedings at all, and mindless for one in Chapter 7, nothing more than a game of flipper chicken that ends when the stock typically is cancelled. Even if it were in Chapter 11 and I thought the company was viable, I'd wait until the reorganization of the share structure was complete and the new stock was liquid in the markets.