Naiive high finance question

So you notice that, say, American Airlines (AMR) is trading at $3.60 a share. You also notice that this price is 13% of the per share book value of the company ($28.23) (which I understand to be the total shareholder equity divided by the float).

The company’s ongoing prospects are dicey, but they’ve got $2.56B in cash (about $16.50 for each outstanding share). Why not just call it quits, sell the planes, liquidate and distribute the cash, and have everyone go home $24.60 per share richer?

I am <assuming> the only (well, not only; see below) fly in the ointment is that they also show a debt/equity ratio of 2.53, meaning that for every dollar of net cash they realize from cashing in the savings bonds or selling the planes, they owe creditors two and a half – and common s/h come in last in line (I seem to remember) in any distribution of liquidated assets. Is there any other reason my master plan wouldn’t work, just from the math/charts?

I can also imagine many other subsidiary reasons, not necessarily based on the fundamentals of such a stock, why this wouldn’t work even if the debt figures were different – management resistance to ending the company (and their ongoing prospect of benefits); the likelihood that assets such as planes might not realize anywhere near their booked value, especially if dumped on a glutted market all at once; third party objections to wrapping up a company when it was still perfectly solvent (I’d imagine the unions might have something to say about just putting the company out of business, and might have standing to have such objections entertained).

So I guess a price/book ratio sub 1.00 does not guarantee profit, or that you could effect a voluntary liquidation/distribution at a gain. But does the circumstance ever arise where there is not only a sub-1.00 price/book, but also a sub 1.00 debt/equity ratio? I would assume the markets are efficient enough to prevent such aberrant pricing, no matter how down they are on a particular stock/industry – but I don’t know if this is the case. Put differently, how frequently have people (here I’m thinking existing common s/h, not necessarily takeover artists buying the whole co. and then stripping plum assets) tried (successfully or otherwise) the ploy I describe – simply shutting down or selling off all the assets of an otherwise going concern just to make a windfall distribution, greater than the share purchase price, to the shareholders? Any other reason that wouldn’t/doesn’t work?

Source of my example:

That’s the key right there. When a company trades below book value, it means that the assets couldn’t fetch their book value if liquidated.

AMR has $32 billion in assets and $28 billion in debt, for a book value of $4 billion. Its equity market cap is only $500 million, or about 13% of book. If the assets were really worth $32 billion, the company would do exactly as you say. The fact that they haven’t indicates that the assets are no longer worth that much.