How will I know what’s going on with a business bankruptcy filing of a company that I own stock in?
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UPDATED: Jul 16, 2021
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Sometimes, you may first learn about a business bankruptcy in the news. If you hold a stock or bond in your own name, you should receive information directly from the company. If you hold stock or bonds in street name with a broker, your broker should forward information from the company to you.
You may be asked to vote on the reorganization plan for bankruptcy, although you may not get the full value of your investment back. In fact, sometimes stockholders don’t get anything back, and they don’t get to vote on the bankruptcy plan.
If you are entitled to vote, you should receive the following from the company:
(1) a copy of the reorganization plan or a summary;
(2) a court approved disclosure statement which includes information to help you make an informed judgment about the plan;
(3) a ballot to vote on the plan;
(4) notice of the date, if any, for a hearing on the court’s confirmation of the plan, including the deadline for filing objections.
Even if you are not entitled to vote, you should get a summary of the disclosure statement, and a notice on how to file an objection to the plan.
You may also receive other notices unrelated to the bankruptcy plan of reorganization, such as a notice of a hearing on the proposed sale of the debtor’s assets, or notice of a hearing if the company converts to a Chapter 7 bankruptcy.