I would say lots of Gray areas / shady and as I don't like the dark side crew you have to look at both side and only play with money you can lose . IMO we have a winner but when you learn about BK and how complicated they are and no two are the same you will GAMBLE with money you can only lose . imo have a small start position with real money on the side to buy in as things get CONFIRMED 100% here is a video set out in a 1,2,3 steps of the normal Chapter 11 if there is such a thing
This proceeding of the U.S. Bankruptcy Code involves not a closure, but a reorganization of the debtor's business affairs and assets. The company undergoing Chapter 11 expects to return to normal business operations and sound financial health in the future; this type of bankruptcy is generally filed by corporations that need time to restructure debt that has become unmanageable.
Chapter 11 gives the company a fresh start, dependent on its fulfillment of obligations under the reorganization plan. A Chapter 11 reorganization is the most complex and, generally, the most expensive of all bankruptcy proceedings. It is therefore undertaken only after the company has carefully analyzed and considered all alternatives.
Public companies tend to try to file under Chapter 11 rather than Chapter 7 because it allows them to still run their businesses and control the bankruptcy process. Rather than simply turning over its assets to a trustee, a company undergoing Chapter 11 has the opportunity to retool its financial framework and be profitable again. If the process fails, all assets are liquidated and stakeholders are paid off according to absolute priority.
Keep in mind that Chapter 11 isn't a get-out-of-jail-free card. When a company files for Chapter 11, it is assigned a committee that represents the interests of creditors and stockholders. This committee works with the company to develop a plan to reorganize the company and to get it out of debt, reshaping it into a profitable entity. Shareholders may be given a vote on the plan, but as their priority is second to all creditors, this is never guaranteed. If no suitable reorganization plan can be prepared by the committee and confirmed by the courts, shareholders may not be able to stop their company's assets from being sold off to pay creditors. (For related reading, check out "Finding Profit in Troubled Stocks.")
How Bankruptcy Affects Investors As an investor, you are between a rock and a hard place if your company faces bankruptcy. Clearly, nobody invests money into a company, whether through its stock or its debt instruments, expecting it to declare bankruptcy. However, when you venture outside of the risk-free realm of government-issued securities, you are accepting this added risk.
When a company is going through bankruptcy proceedings, its stocks and bonds usually continue trading, albeit at extremely low prices. Generally, if you are a shareholder, you will usually see a substantial decline in the value of your shares in the time leading up to the company's bankruptcy declaration. Bonds for near-bankrupt companies are usually rated as junk.
When your company goes bankrupt, there is a very good chance you will not get back the full value of your investment. In fact, there is a chance you won't get anything back. Here is how the SEC summarizes what may happen to stock- and bondholders during Chapter 11:
"During Chapter 11 bankruptcy, bondholders stop receiving interest and principal payments, and stockholders stop receiving dividends. If you are a bondholder, you may receive new stock in exchange for your bonds, new bonds or a combination of stock and bonds. If you are a stockholder, the trustee may ask you to send back your stock in exchange for shares in the reorganized company. The new shares may be fewer in number and worth less. The reorganization plan spells out your rights as an investor and what you can expect to receive, if anything, from the company." Basically, once your company files under any type of bankruptcy protection, your opportunities and rights as an investor change to reflect the bankrupt status of the company. While some companies do indeed make successful comebacks after undergoing restructuring, you need to realize that the risks you accepted when you invested in the company can become reality. And if your stake in the pre-Chapter 11 company ends up being worth anything in the restructured firm, chances are it won't be as much as it was when you first entered your position and it won't be in the same form.
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