Is Federal Mogul stock worthless now?

[What_the]

The came out of bankruptcy a few days ago.

I’ve got a feeling their old stock is now worthless but I’ve searched and can’t find anything definitive.

[Really_Not_All_That_Bright]

It was a Chapter 11 “reorganization”-type bankruptcy filing, which means your stock is (or will be) worth something.

[gazpacho]

@Really Not All That Bright

It was a Chapter 11 “reorganization”-type bankruptcy filing, which means your stock is (or will be) worth something.

I don’t think this is necessarily true.

SEC.gov | Bankruptcy: What Happens When Public Companies Go Bankrupt

How Are Assets Divided in Bankruptcy?

1. Secured Creditors - often a bank, is paid first.

2. Unsecured Creditors - such as banks, suppliers, and bondholders, have the next claim.

3. Stockholders - owners of the company, have the last claim on assets and may not receive anything if the Secured and Unsecured Creditors’ claims are not fully repaid

and

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.

[ElvisL1ves]

Don’t count on it for your retirement

The company’s stock will be relisted, but it has yet to announce an exchange. Federal Mogul’s former stock was canceled last month and warrants to purchase new common stock will be issued, but under the terms of the reorganization. So a holder of 1,000 shares of old stock would receive about 75.5 stock warrants in exchange.

[dalej42]

This is similar to Delta airlines last year. DALRQ was declared worthless and DAL stock began trading on the NYSE.

If you get some warrants for the new stock, they can be sold as well.