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Can a company just cancel their stocks?

L

LongAce

Senior member
This is in regards to the US Ariways merger. US Airways has just cancelled all their stocks and the people who has their stocks are just basically out of luck. If that's the case, other companies can do the same so everyone who has any type of stock could basically lose everything even if the company is actually still in business.
 
I think they can reaquire the stock to go private (by taking on debt or similar means), but they can't simply eliminate them. The share holders own the company. Litterally. That's like saying you own a gas station and someone can so, "no you don't"
 
How can someone cancel stocks. I mean thats your token of ownership (even if it is 0.000000000000001%). They have to pay you some way or the other
 
US Airways filed for bankruptcy. Of course the common stock is worthless. That's usually the case in 99% of bankruptcy cases. Bonds and creditors own the company now. Common stock holder holds worthless piece of paper. When and if US Airways exits bankruptcy, bonds and creditors will be issued new stocks.

Remember, creditors are always first in line to get paid. Common stock holders are one of the last in line along with everyone else.
 
Originally posted by: CaesaR
How can someone cancel stocks. I mean thats your token of ownership (even if it is 0.000000000000001%). They have to pay you some way or the other
Click to expand...

Not sure on "canceling" stocks, but typically common stock holders are the absolute last people to get paid (if at all) when a company goes tits up.

Basically goes -


Wages
Taxes
Accounts payable
Backed creditors (mortgage bonds, bonds with collateral)
General creditors (basic bond holders)
Preferred Stock holders
Common stock holders

Owning equity guarantees zero return on investment.
 
Originally posted by: LongAce
What happens to shares of existing stocks in US Airways and America West? Will new common stock be issued?

"The transaction anticipates that the existing shares of US Airways stock will be cancelled and shares of the new company will be distributed to existing America West shareholders, stakeholders of US Airways, and the new equity investors."

http://www.americawest.com/awa/content/...panyprofile/usair/investor_faqs.aspx#1
Click to expand...

basically you get the stock of the new corporation. No money loss there.

EDIT:

I didn't notice they filed for bankrupcy ... your common stock is not totally worthless, but you're the last one in line to get money back.
 
Originally posted by: LongAce
So basically people who owns these stocks are screwed. Man, that sucks.
Click to expand...
That's the risk of being a stockholder I'm afraid.
 
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