One Response

  1. Shawn F
    Shawn F April 15, 2009 at 3:57 AM |

    A company files for bankruptcy because its debts exceed its assets. There is a hierarchy for repaying the debts with secured loans at the top and common shares at the bottom.

    A bankruptcy court will discharge debts to either allow the company to reorganize, to be sold to another company, or pieces to be sold off. Normally since common shares are the least likely to be repaid after bankruptcy, common shares are usually useless.


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