AboutPaul Henneman Expertise Stock forecasting and fair market valuations.
Experience
Past/Present clients CBSMarketwatch.com, Hoovers.com, Multexinvestor.com, Bank of NY, numerous hedge funds and institutions, other partners and clients can be viewed at http://www.valuengine.com/about/careers.html
Question Hi! Paul,
After Lehman Bros. filed bankruptcy protection, I find that its shares is trading today. Why people are still interested in a to be bankrupted stock? Tks.
Answer Raymond,
Thank you for your question! A bankrupt company still continues to exist and operate, bankruptcy means that the company is seeking protection from its creditors. Generally what happens is that a court or board is appointed to decide what to do with the company in order to pay off its debts. Many things can result, such as selling off assets, or simply continuing to operate but restructure a bit to increase profits. Typically debtors come before shareholders, but if there are enough assets so that the debtors can be paid off, or if the company continues to operate in some form, it is possible that the shareholders can still make money. There is a wide array of possible scenarios, but ultimately it certainly would be a very risky investment to but Lehman Brothers stock now!
Here is a great link that goes into the specifics in more detail, including chapter 7 versus chapter 11 bankruptcy. This is from the goverment's SEC main website so it is a reliable source:
