Quebecor World bankrupt - so what happens to the stockholders?

Factual Questions
1

Quebecor World (IQW) was granted bankruptcy protection in Canada today and filed for protection in the United States. Link. Most of the news articles have said that the company will be reorganized. What does that entail?

Trading was halted on the stock this morning, so this is obviously not a request for trading advice - I couldn’t trade the stock even if I owned any and wanted to. I’m just curious what happens to the shares and the shareholders. The shares are listed at 0.32.

Does the stock price drop to zero and then the shares disappear? Do the stockholders own several shares of a company that would be valued at zero, but have the potential to be worth more if they sit on them and wait for the reorganized company to make it into the black? Can anyone explain what happens here, preferably using little words and brightly-coloured charts?

2

“Why don’t old shareholders still own shares when a company emerges from bankruptcy?” is a perennial question. Previous go-around:

3

Thanks! Truth be told, I didn’t even realize that stockholders didn’t own the shares anymore.

4

Boy, that old thread took a long time to get to the point. But let me see if I get it:

  • When a company declares bankruptcy, that company ceases to exist.
  • Therefore, your shares cease to exist. If there is money left in the company coffers after paying everybody else who is owed money, the stockholders might get something. But don’t hold your breath.
  • If the company is trying to “reorganize” and later “emerges” from bankruptcy, it’s not the same company, despite the fact that the name, factories, personnel, etc., may be the same. It’s a new company that is using the old company’s assets (and an established company’s brand/name can be a major asset).
5

Note also that the shares may continue to trade for some time after filing for bankruptcy, giving shareholders a chance to unload them for a small fraction of their original value. For shares listed on the NASDAQ, they will generally sprout a fifth letter code of “Q”, indicating “bankruptcy proceedings”. They may even get delisted and continue to trade on pink sheets while the proceedings are going on. A usual path might be that the old shares sink into oblivion on the pinks, finally trading for something like $0.002 each by the time the actual bankruptcy comes along. If you’ve stubbornly held on to them all through that process, the above remarks apply.