K-mart's bankruptcy question

[Maetryx]

Maetryx here, 😎

From this Washington Post article:

Ron Hutchison, the company's chief restructuring officer, said Kmart's common stock will have no value once Kmart emerges from bankruptcy.

Why? Do they issue new stock under a new symbol? I don't understand this.

 

[MemnochtheDevil]

The creditors end up owning the company and the share holders get nothing. This is almost always how bankruptcy works out...

 

[cipher00]

Prolly cuz all K-Mart's creditors divvy up what assets the company has. Stockholders are last in the pecking order so they get wiped out.

 

[Maetryx]

Ah. The creditors may end up owning the company. That makes sense. So if you have a brokerage account with shares of KM, do they go to 0.00 value? Or do they just go away?

 

[arcas]

They'll eventually tend towards 0. The common investor almost always gets shafted when the company files for restructuring. The big institutional investors (corporate pension plans, mutual funds and the like) are sometimes granted a percentage of the new company's stock but rarely does an individual investor get anything.

 

[katka]

This is terrible the Golden Parchuters get a tax write-off as well.