Now just to clarify the title of this video, a stock doesn’t a bankrupt it goes to 0 the company can go bankrupt, a stock is just a share, a piece of business. And if the business is worthless then so will your stock be in the future.

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1. Chapter 11 ( a chance to reorganize it debt and make a payment plan )
Now this a company asking the courts to protect them from creditors until I can make a plan of repayment ( so their assets don’t get seized)
Now you often people do this In order to get some time to recover and make payments at a more manageable pace
For example:
Invested into a company that might have been forced into Chapter 11 bankruptcy
That company was an airline during the pandemic and I knew for sure that the airline had gone through chapter 11 before and had come out perfectly fine
So I went ahead and invested even with that threat and I made 100% on my money

Keep in Mind:
When the public hear bankruptcy its gets scared but if its chapter 11 it might not be bad ( or it may ) it's your job to find out
So your shares will likely be okay but will take a big hit
And if the company does not recover then they can all the way to 0 and force the company to liquidate

Tip: Keep in mind more than often the company will stop paying out dividends

2. Who Gets Paid when the company Liquidates
( once the company get liquidated, Bonds holder first, Preferred shareholder second, and the common shareholder last )
Which means often when they go bankrupt common shareholder get nothing
So keep that in mind

However: Liquidation are not bad ( bankruptcy is the problem )
During the 1920s company we’re selling for less than they we’re worth
So common strategy was to buy as much common stock as possible
And then force the company to liquidate and pay you a big paycheck to the shareholder( Benjamin Graham was the King of this )

3. Chapter 7 bankruptcy is a Different Monster
This means the company is 100% done and all the assets and procedures will be given to the creditor
And if their going bankrupt they most likely don’t have enough to pay the creditor
Which most likely mean nothing you the shareholder ( and your shares are done )
4. So here is some advice
Make sure you understand the company you are going to invest into
And buying the dip when a company is trash means nothing
Protect your capital

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.