Q: When does it make sense to invest in the common stock of a bankrupt company?
A: Almost never. Among the rare exceptions are cases where the bankrupt company could be the recipient of a large legal judgment or settlement.
Clearly, the above does not apply to ABPIQ/BVTI, which is why I found it astonishing that biomedreports.com recently wrote a glowingly bullish piece on this company (#msg-38295693).
A non-biotech example where investing in the common stock of a bankrupt company might make sense is Tronox (TRXAQ.PK), the 2006 spin-off from Kerr-McGee, which was itself acquired by APC later in 2006. Tronox shareholders have sued APC, alleging that the 2006 spin-off was a fraudulent conveyance. They may have a case.
BioMedReports.com is a pump & dump website that gets paid to publish exaggerated and misleading pieces on such companies as HEB and CTIC. Please do not post their write-ups on this board (unless the purpose is comic relief).
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