Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: TimbaBear who wrote (15951)	12/25/2002 9:59:28 PM
From: Don Earl	Read Replies (1) \| Respond to of 78627

Timba, <<<Are you saying that the holders of the equity of Armstrong will have no ownership interest in the company that comes out?>>> Yes. <<<That doesn't make sense to me. Why would management take the trouble to treat all other classes fairly and then snub the shareholders who they demonstrated such respect for over the entire course of the business?>>> As the owner of common stock, you are an owner of the company, not a creditor. In order for you, the owner, to receive any proceeds in a bankruptcy reorganization, ALL other classes of creditors have to be made whole. It doesn't have anything to do with "fair", it has to do with our bankruptcy system as it currently exists. I can appreciate the incredulity of anyone with any kind of sense of justice, but the fact of the matter is making assumptions about right and wrong will cost you money in this type of situation. Perhaps the most amazing part of the process is that shareholders are never given a chance to vote against management issuing debt that automatically wipes out their share of a company's equity. The time it would take me to download the document you posted is more than I would want to spend on a Q stock, let alone what it would take me to read it. On the rare occasion warrants are issued to existing common in bankruptcy, it's almost never a good deal. Plus, from when a plan is filed, to a company actually emerging (if ever) from bankruptcy, is typically at least several years. Most companies stop filing financial reports with the SEC after entering bankruptcy, so to take any kind of position in the company requires going in totally blind as far as the current financial condition of the company. The Forbes article didn't have a negative slant, it was being kind. If this really is the kind of company you want to own stock in, wait to see if it exits bankruptcy, then wait another year for the creditors who got stuck with stock to get done closing their positions. Hopefully you'll get some additional feedback on "value" in bankrupt pink sheet and otc stocks. It really is that bad, but I understand it's hard to grasp on an emotional level just how bad it is for anyone who hasn't watched one play out. I've only owned stock in one company that went bankrupt, but I made sure I got my money's worth on the tuition I paid for my education. I think the experience made me a better investor, but it did take a lot of the light hearted optimism out of buying stock in highly leveraged companies.