What the fuck? How is that even legal? Aren’t stocks supposed to be ownership stakes in the company? How can they just take that away?
In a liquidation sale, common stock holders only get paid if there is money left over after everyone else gets their cut. Creditors, bondholders and preferred stock holders are ahead of them in line.
It’s also worth pointing out that the company is not publicly traded, it’s privately owned, so in effect the shares were always worthless. It’s not clear to me if they were actually ownership shares or just options against the possibility of the company going public at some point in the future.
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song as old as time
Tale as old as rhyme
Capitalism and the diseaseI tried researching this a bit, and from what I understand, the company basically has no money, which in turn makes the stock worthless. So since the stock is effectively $0.00 per share, they can just “cancel” the stock completely.
This could be oversimplified or dead wrong, but I don’t understand any other way this could work legally.
I think that’s how it’s been justified but the company just sold so it’s not worthless anymore right? Can’t have it both ways.
Reading into this it’s likely a distressed asset sale, a bankruptcy in all but name. They’re toast and they know they’re toast, but instead of bankruptcy they sell all the assets. They then use the money to pay off in order: wages, debts, preferred shares, common shares. Sounds like this is preferred over bankrupty, which when you get the courts involved is expensive and time consuming (so fewer debt holders get their money).
