# SD on Stock after Bankruptcy
**URL:** https://boards.straightdope.com/t/sd-on-stock-after-bankruptcy/141069
**Category:** Factual Questions
**Created:** [December 7, 2002, 2:21am UTC](https://boards.straightdope.com/t/sd-on-stock-after-bankruptcy/141069 "2002-12-07T02:21:14Z")
**Posts on this page:** 6
**Page:** 1
### Author:  [@Markxxx](https://boards.straightdope.com/u/Markxxx)
#### Post date: [December 7, 2002, 2:21am UTC](https://boards.straightdope.com/t/sd-on-stock-after-bankruptcy/141069/1 "2002-12-07T02:21:14Z")
What happens to stock in a company after the company declares bankruptcy?
For instance UAL was selling for a dollar a share. If it declares bankruptcy does it automatically become worthless. If so,has a company done this and the stock gone up?
Does it matter if they do a reorganization bankruptcy as opposed to full bankruptcy?
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### Author:  [@Ringo](https://boards.straightdope.com/u/Ringo)
#### Post date: [December 7, 2002, 2:32am UTC](https://boards.straightdope.com/t/sd-on-stock-after-bankruptcy/141069/2 "2002-12-07T02:32:40Z")
I don’t know what will ultimately happen with Enron, but they declared bankruptcy months ago and their stock traded almost 6 and a half million shares today at about a dime per. Worldcom is a little under a quarter.
I would think reorganization would generally be better for stockholders, as it leaves some chance of the company turning itself around.
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### Author:  [@Mr.Blue\_Sky](https://boards.straightdope.com/u/Mr.Blue_Sky)
#### Post date: [December 7, 2002, 2:36am UTC](https://boards.straightdope.com/t/sd-on-stock-after-bankruptcy/141069/3 "2002-12-07T02:36:55Z")
Odd this topic should come up today. A cow-orker asked me if I thought he should invest in Worldcom stock. He figured at 29¢ per share, it was a bargain. I told that **I** wouldn’t buy it, but he could do so if he wanted to throw away good money. I just don’t think it’ll ever get back to anywhere it’s old level.
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### Author:  [@happyheathen](https://boards.straightdope.com/u/happyheathen)
#### Post date: [December 7, 2002, 4:12am UTC](https://boards.straightdope.com/t/sd-on-stock-after-bankruptcy/141069/4 "2002-12-07T04:12:57Z")
Holders of “common” stock get paid last - after employees, secured loans, holders of “preferred” stock, the orphans and widows, and just about everyone else in sight.
This is why Enron, et al are so cheap - nobody expects there to be any money left to pay shareholders.
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### Author:  [@aahala](https://boards.straightdope.com/u/aahala)
#### Post date: [December 7, 2002, 5:16am UTC](https://boards.straightdope.com/t/sd-on-stock-after-bankruptcy/141069/5 "2002-12-07T05:16:15Z")
It’s possible a company’s stock could go up after bankruptcy.
IIRC, TWA’s stock went up quite a bit after their first, or was it the second–if you file three times in about seven years, it’s hard to keep track.
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### Author:  [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)
#### Post date: [December 7, 2002, 5:28am UTC](https://boards.straightdope.com/t/sd-on-stock-after-bankruptcy/141069/6 "2002-12-07T05:28:35Z")
There are two ways you can make money off of stock in a bankrupt firm: (1) The firm can be liquidated, and, per **happyheathen** , there _just might_ be money left over after all of the creditors, lawyers, and the government are paid; or (2) The firm can be reorganized, under a plan approved by creditors and the bankruptcy judge, which provides crumbs (typically _heavily diluted_ stock in the reorganized firm) for the original share holders.