OK Toxic I will give one example of how it COULD work. Just for this example let's assume that there are 3 billion legitimate shares already issued from the Authorized shares. Also, let's assume there are also 1 billion naked shares out there. Assuming also that the powers that be ordered Broker Dealers to force the cover of these naked shares.
Now:
1. The Co increases the Auth Shares to 4 billion and negotiates to issue and sell 1 billion shares to the shorts to enable them to cover. Let's say at $1 per share. The Co just made 1 billion dollars, the shorts eliminate their IOU to the Brokers, and there are now 4 billion shares outstanding.
2. 1 billion dollars divided by 4 billion shares amounts to $.25 per share valuation based on Cash Held by Co.
3 The Co issues a cash dividend of .20 per share which would give shareholders either their investments back or a hefty profit depending on their purchase price. This leaves the Co with $200 million or .05 per share.
4. The Co then does a 100 for 1 reverse split bringing the new Outstanding down to 40 million shares, now valued at $5 per share.
5. The Co could then pay all debts and rebuild the business, or sell it or whatever.
It would work, but I don't expect it to ever happen.
