Bankrupt and Distressed (BAD) Research and Due Diligence

[Enterprising Investor]

Debtors have investments in non-Debtors.

Income and losses continue to flow to the parent company.

Creditors are owned money at the parent company level. All entities are dealt with at the corporate level in the plan of reorganization. For example, LEHMQ creditors will reap all benefits from asset sales and spinoffs until all claims are paid. Equityholders will end up with nothing unless creditors are made whole.