Bankruptcy courts follow an "absolute priority rule" when distributing remaining assets. Common stockholders are at the bottom of this hierarchy: : Banks or lenders with collateral. Unsecured Creditors : Bondholders, suppliers, and employees.
: Major exchanges like the NYSE or Nasdaq often delist companies that file for bankruptcy. buying stock in bankrupt companies
: Investors with hybrid equity-debt holdings. Bankruptcy courts follow an "absolute priority rule" when
When a company files for bankruptcy, its shares typically continue to trade, but the environment changes significantly: its shares typically continue to trade
: Usually receive nothing unless all higher-tier creditors are paid in full. Chapter 7 vs. Chapter 11
: Some brokerages, such as Fidelity or Public , may restrict trading in these stocks or require special permissions due to volatility and low liquidity. The "Waterfall" of Payouts
