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Own shares in a company – all business – is risky, but the potential benefits are proportional. It is there that growth can be the strongest for an investor.
But like any property, investors remain in the last line with bankruptcies.
For chapter 7, that means there is nothing left to divide. Chapter 11 bankruptcies are not usually easier for shareholders, however. Bondholders, creditors and sellers are always paid first, and they usually settle for a few cents. Most bankruptcies completely wipe out shareholders.
Even in the rare cases where a retailer's existing shares are not canceled and new shares are issued to investors willing to provide new financing, these stocks tend to remain worthless for a long time.
Again, there are no two bankruptcies ever, and retail is anything but an exception to this standard. Indeed, chapter 11 bankruptcies are an ever-changing target because it is never clear to what extent the company will be able to convince consumers to continue shopping at that company's premises.
However, two things are certain of the restructuring or definitive closure of the chain stores: it is still a proverbial circus and it is always ugly.
SEE ALSO: Penny Stocks: Why Should You Always Stay Away?
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