US Global Nanospace Inc (USGA)

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A bankrupt company can file Chapter 11 of the Bankruptcy Code to "reorganize" its business. According to the SEC, if a business files Chapter 11, "Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court."

During Chapter 11 bankruptcy, the U.S. Trustee, the bankruptcy arm of the Justice Department, will appoint one or more committees to represent the interests of creditors and stockholders. The committee works with the company to develop a plan of reorganization to get out of debt. The plan must be accepted by the creditors, bondholders, and stockholders, and confirmed by the court. Once the plan is confirmed, a more detailed report must be filed with the SEC on Form 8-K.

The trustee may ask stockholders to send back the company's stock in exchange for new shares in the reorganized company. These new shares may be fewer in number and worth less. Stockholders will also stop receiving dividends. Under Chapter 11 reorganization, the company will explain investors' rights and what investors can expect to receive, if anything, from the company.