Robert Ricks wrote:
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According to my records K-mart shares were cancelled in May 2003, when
the final bankrutpcy order issued, and "old" shareholders didn't receive
anything in the bankruptcy reorganization. You could probably verify
this on the K-mart site, in the investor-relations section.

I don't follow HealthSouth at all - I didn't know they'd actually gone
into bankruptcy. You might try the investor relations section of their
web site, or call them up to ask.

-Tad

Tad,

Thanks for the info. Very informative. Are you certain about this with
K-Mart? Also, any idea if this was true of HealthSouth(old shares
worthless, new shares issued but not to original holders) ? We are hearing
tales of 4 cents a share purchases.
"Tad Borek" <borekfm[at]pacbell.net> wrote in message
news:RfoVd.2083$C47.1020[at]newssvr14.news.prodigy.com...
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Robert Ricks wrote:
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Steve-
Not just a dog, but one heading for doggie-heaven (probably).

When a company files for bankruptcy reorganization, it begins a legal
proceeding that usually (but not always) results in the original stock
of the company being cancelled, with new stock issued and distributed to
creditors of the company. By cancelled I mean "the shares aren't worth
the value of the paper they're printed on."

Though it's making Eddie Lampert and his investors rich(er), "old"
K-mart is kaput. The old stockholders got zilch. It was worth zero not
too long after the bankruptcy filing. Did it go to zero right when the
company filed for bankruptcy? No, it didn't - because a) there's this
tiny chance the original stock won't be cancelled, or that shareholders
might get something - as with PG&E's bankruptcy for example, and b) it
costs money to trade stocks and 100 shares [at] 15 cents aren't worth the
bother and c) there's a lot of people who use reasoning like your
friend's, and don't understand what bankruptcy means for an "old"
shareholder, so keep trading the stock. The stock might keep trading
with bounces up and down, basically being swapped among a bunch of
people Who Should Know Better.

NEW K-mart is worth what, a hundred bucks a share or something? But not
one share of that new K-mart stock went to the original K-mart
stockholders - the ones holding the shares that existed before the
bankruptcy.

BTW, shares in bankrupt companies have a "Q" tacked onto their ticker.
Like, "Quit looking at this stock, it isn't worth spit!"

-Tad

PS I don't know the exact percentage of bankruptcy filings that do NOT
result in cancelled stock but it's very small. I started keeping an eye
out for them about five years ago and I think I've seen only two
companies where it happened.

PPS the SEC's explanation of this is good:
http://www.sec.gov/investor/pubs/bankrupt.htm

"BMS" <mcfarland[at]yahoo.com> writes:
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[Winn-Dixie]

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Which is precisely what Marty Whitman (TAVFX) did with K-Mart...

Navigating a bankruptcy play is complex and absolutely not
for the average buy-and-hold investor.

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See above...

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PLEASE, folks, do this! See the link below for some help:
http://www.greenend.org.uk/rjk/2000/06/14/quoting


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No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

For a bankrupt company, if you think there is any chance for a come back,
buy the bonds.

If you are looking for a home run, take a pass on this one.

"Robert Ricks" <stevericks[at]mindspring.com> wrote in message
news:MB8Vd.11840$Ba3.9340[at]newsread2.news.atl.earthlink.net...
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A friend at work-the type who has a knack of having anything he touches in
the market turn to gold-has suggested that Winn Dixie supermarket chain
stands a good chance of generating considerable returns in the future (it is
the supermarket in the movie "Because of Winn Dixie" that your kids are
dragging you to see).

As you may know, this chain has recently filed for bankruptcy and its stock
is now selling below $1 a share. Yes, in the penny stock range. Anyway, this
friend's logic is, "can you see this company really disappearing? Someone
will buy it out -look K-mart etc." Having been a super conservative
investor (mutual funds only for life) I am trying to decide if this might
be a reasonable play (yeah-gamble, call it what it is). I guess what I am
asking is, does anyone have thoughts on the likelihood of major companies
like this actually going under? Do they usually turn around or go down the
tube? Also, is something like this a better buy for an ira or regular
account?

Thanks in advance -
Steve