If the shares are delisted from NASDAQ, I would expect them to trade on the OTC Bulletin Board, unless they become non-compliant with their SEC filings.
Frequently Asked Questions
Bankruptcy
This section discusses the listing implications for a NASDAQ company, which files for bankruptcy protection.
Applicable Rules: Marketplace Rules 4300, 4340(b) and 4450(f) and IM-4300
What are the listing implications for a company filing for bankruptcy protection?
NASDAQ Marketplace Rules 4300,4340(b) and 4450(f) and IM-4300 provide that a company may be delisted in the event it files for bankruptcy protection. NASDAQ will issue a delist letter immediately following such a filing; however, the company is afforded an opportunity for an expedited hearing before a NASDAQ Listing Qualifications Panel. See Hearings Process for additional information.(Updated: November 25, 2008)
What happens to trading in the securities of a company after it announces the bankruptcy filing?
When a company announces that it has filed for bankruptcy protection, or that filing is imminent, NASDAQ will impose a news dissemination halt. Generally, trading will be allowed to resume 30 minutes following release of the news. Shortly following the resumption of trading, NASDAQ will issue a delisting letter to the company, which will indicate that the company will be delisted in nine calendar days from the date of the determination letter unless it requests a hearing within seven calendar days. The company is required to publicly disclose that it has received this letter as soon as possible, but in no event later than four business days from receipt. If the company requests a hearing, trading will usually continue until the Panel issues its determination. Hearings for bankrupt companies are generally scheduled within 25-30 days of the date of NASDAQ's delisting letter.
In addition, NASDAQ will broadcast an indicator over its market data dissemination network noting the company's non-compliance. The indicator will be displayed with quotation information related to the company's securities on NASDAQ.com, NASDAQTrader.com and by other third-party providers of market data information. Also, NASDAQ posts a list of all non-compliant NASDAQ companies and the reason(s) for such non-compliance on our website. Click here to view the list. The company will be included in this list commencing two business days from the date of the delist letter.
What factors does the Panel consider when deciding whether to continue the listing of a company that has filed for bankruptcy protection?
The Panel will delist the company if the company cannot demonstrate that it is in compliance with NASDAQ's listing requirements or that it will regain compliance within a reasonable period of time. In that regard, the Panel will request that the company provide current financial statements demonstrating compliance with the NASDAQ listing requirements as well as projected income statements indicating that the company will be able to sustain compliance. With respect to future compliance, the Panel will principally focus on whether the projected loss rate is such that it appears unlikely the company will be able to sustain compliance with the stockholders' equity requirement for the next twelve months (assuming the company does not meet one of the equity listing alternatives such as market value of listed securities or net income from continuing operations in the current fiscal year or two of the three previous fiscal years).
In addition to a demonstration that the company can sustain compliance with the listing requirements, the Panel may also require the company to show that the common shareholders and potential investors are likely to maintain a meaningful economic interest in the post-bankruptcy entity. Further, the Panel may request the company to demonstrate that it plans a near-term emergence from bankruptcy, for example, through a pre-packaged bankruptcy plan.
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