Investors flout logic, buying up Hertz and other bankrupt companies' stocks

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Retail traders flout legal logic by buying Up bankrupt stocks, like Hertz

shares surged after the companies filed for bankruptcy, according to Robintrack, a website unaffiliated with the stock trading platform that uses data to show trends.

“No one ever loses equity in a bankruptcy case,” U.S. Bankruptcy Judge David Jones said during a status conference in the J.C. Penney case last month. “Equity gets lost long before the case is filed.” Under U.S. bankruptcy law, shareholders are last in line for any kind of payout — behind the lawyers, lenders and vendors — making a recovery for shares unusual. The size and scope of payouts are usually determined by a so-called Chapter 11 plan, which creditors vote on and send to a federal judge for approval. Those plans often leave even high-ranking creditors getting less than they’re owed.Hertz, which climbed 95% since it filed for bankruptcy protection May 22Pier 1 Imports Inc.

Meanwhile, debt securities tied to the companies continue to trade below par, implying expectations of a less-than-full recovery for creditors who are ranked well ahead of shareholders.Whiting Petroleum does have a plan on file that calls for a payout to current stockholders in the form of new shares. But as with most everything in bankruptcy, the plan is subject to court approval and could face challenges from higher-ranking creditors.

 

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WSB autists piling in

They just know that Trump's buddy Carl Icahn owns most of Hertz and that Trump will never let his buddy go broke.

Wait, what? Eh, let em

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