Articles Comments

Debt Relief – Insolvency – Bankruptcy Information » Questions & Answers » Questions About Company Bankrupt

Questions About Company Bankrupt

Can a CEO run a company bankrupt and simply walk away free?

Lets say you’re an honest CEO of a company and have done nothing wrong like insider trading or fraud, and abide by all disclosure laws, etc. However, you are a poor manager in general and manage to bankrupt a company (liquidation or adminsitration) with billions of dollars worth of losses. Can you be charged for anything?

Industry Expert answers:

My understand is that the advantage of a Corporation is that it is a separate entity from the individuals who run it. This means that if it goes bankrupt, it is the same as your brother going bankrupt. Individuals are not liable for the debts of another individual under normal circumstances. Certain types of LLCs (Limited Liability Companies) and certain states’ laws may limit the abilities of a Corporate entity to protect Executives.

Basically, the answer is yes. A crummy CEO (or one whose company simply becomes obsolete) can, in theory, walk way without any personal liability, especially if he cannot be charged with a crime or violation of company policy.

What happens to the stocks of a bankrupt company if the company is bought by some other company?

What happens to the stocks of a bankrupt company if the company is bought by some other company.

I am plaaning to buy stocks of Bearing point. The company is bankrupt now and selling its operations across the globe. What will happen to my stocks if I buy them?

Industry Expert answers:

Only if a company comes in and offers to buy the company as a whole will you make money through that sale. For example, IBM recently offered to buy Sun Micro for $9.40 per share – if the offer had been accepted, all shareholders would have turned in their Sun Micro shares for that amount. However, no one out there has offered to buy BearingPoint, so BearingPoint is selling off pieces of its businesses to satisfy creditors and hopes to emerge from bankruptcy after reorganization.

Whether your stocks will be worthless or go up will depend on how well BearingPoint can reorganize and run their business after emerging from bankruptcy.

Powered by Yahoo! Answers

RELATED POSTS:

  1. What happens to the stocks of a bankrupt company if the company is bought by some other company? What happens to the stocks of a bankrupt company if the company is bought by some other company. I am...

  2. What happens to the stock owners of a Ch.11 bankrupt company if the company is bought out by another company? What happens to the stock owners of a Ch.11 bankrupt company if the company is bought out by another company?...

  3. Questions About Company Bankruptcy 401k If the company managing your 401K files for bankruptcy, are your investments protected? I don’t mean, obviously, the companies...

  4. How will I get a 1099 from a bankrupt company? I worked as a contractor for a bankrupt company in 2009. How will I get a 1099 from that company....

  5. What happens to my stock if a company goes bankrupt? I own stock in a company that is facing bankruptcy. Will I lose my stock if the company is acquired...

Written by

Filed under: Questions & Answers

One Response to "Questions About Company Bankrupt"

  1. [...] Read more … Share this:TwitterFacebookLike this:LikeBe the first to like this post. [...]

Leave a Reply

Connect with Facebook

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Not finding what you're looking for?
Do a custom search of our entire site:

Get Adobe Flash player