By:  LINDSEY O’NEILL, ESQ.

With several big companies heading into bankruptcy lately, many investors and stockholders are left wondering what will happen to their investments.   Does the law protect their interests?  Does the stock retain any value? 

The federal Securities and Exchange Commission (SEC) published a short guidebook to help investors (Bankruptcy: What Happens When Public Companies Go Bankrupt).  The guidebook explains in plain English what happens when companies file for bankruptcy (whether under Chapter 7 liquidation or Chapter 11 reorganization), what happens to investors’ stocks or bonds in bankruptcy, how the bankruptcy process works, and what investors can do to find out about their shares. 

Ultimately, if you’ve invested in a now-bankrupt company, you would be wise to consult with an experienced attorney about how best to protect your legal rights, especially if you suspect you may have been defrauded.  In many cases, there may be pending SEC and/or state regulator investigations pending against the company as well.   In the bankruptcy proceedings, investors may have the ability to vote on certain company reorganization options. 

If you have questions about your investments, contact a qualified attorney in your area today.