Saturday, May 12, 2012 3:33:29 PM
Shareholders got fleeced there as well.
Q: We bought shares of General Motors right before it went bankrupt. We paid $7.80 a share, and those are now worth pennies. How can they do this to us and turn around and sell new stock?
A: Investors who buy shares of a company just before bankruptcy, and lose practically everything, can't help but feel burned when the company re-emerges.
Your question is the same one I get all the time regarding many other companies that enter bankruptcy protection, wipe out shareholders, and then re-emerge sometimes successfully. One of the classic example of this is Kmart. Some investors who bought before the company's restructuring, only to watch it re-emerge as Sears, fumed for years.
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