Replies to post #305274 on Spongetech Delivery Systems, Inc. (fka SPNGQ)

[overachiever]

Bankruptcy reorgs are never "good" for common stock holders. They might be good for the holders of SPNG debt, but that's about it. This stock is still very overpriced. With almost 3 billion shares oustanding and a lot of debt accumulating, the show is almost over here for the little guy.

[Mo-John]

"The $3.50 sponge price was a little distrubing." IMO without the 10K you really don't know what is a distrubing price for the sponges. They could be selling at 10 bucks and generate a loss for SPNG because of overheads etc.. or they could be selling at one buck and generate huge profits for SPNG. Shareholders and investment analyst don't have a grasp on the cost structure due to lack of info from the company. What is really distrubing to me is no 10K to date!

[OldTymer]

Christy from Google, regarding Chapter 11 and shareholders, Chapter 11 would most likely be the worst thing for shareholders.

You said:

"I disagree on the effect of a bankruptcy reorg on the shareholders. It might take a year but it could be the best thing for them under present circumstances. But without numbers, who really knows for sure."

http://www.sec.gov/investor/pubs/bankrupt.htm

Note: Investors should be cautious when buying common stock of companies in Chapter 11 bankruptcy. It is extremely risky and is likely to lead to financial loss. Although a company may emerge from bankruptcy as a viable entity, generally, the creditors and the bondholders become the new owners of the shares. In most instances, the company's plan of reorganization will cancel the existing equity shares. This happens in bankruptcy cases because secured and unsecured creditors are paid from the company's assets before common stockholders. And in situations where shareholders do participate in the plan, their shares are usually subject to substantial dilution.

Also:

http://www.wikinvest.com/stock/General_Growth_Properties_(GGWPQ)/Bears/General_Growth_Properties_(GGP)/Bears/Why_Chapter_11_and_not_7%3F

"The typical bankrupcty is forced because the liabilities (debt) outsize the assets. In this case the common shareholders are wiped out. But, we know that the assets GGP has are in excess of the liabilities. In this case, even in a worse case Chapter 11, shareholders are not wiped out".

You said:

"But without numbers, who really knows for sure"

True. However, according to the SEC, in most instances, the old shares will be cancelled and new ones issued, leaving the shareholders with worthless stock. Either way this is a mess, yes?