This is the argument every time new people take control of a company. People assume the common won’t be wiped out. But logically it doesn’t make sense unless the new owner is Santa Claus and handing out gifts to legacy shareholders. The company today is worth less than zero when factoring in debt. Every common share is worth zero. If a new ownership team takes over a closing and creates value through their own investment why would they allow the legacy common holders to profit? Those legacy shareholders have contributed nothing since there is no cash in the bank and negative enterprise value. I make this argument every time a takeover happens and it always plays out the same way - new ownership announced, very few details provided, people get excited and make assumptions about future plans for the common and equity, stock rockets higher and is then followed by a crash back to earth when everyone realizes it was too good to be true that new ownership was going to value to go to legacy shareholders.
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