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What would happen to General Motors stock if they were to file bankruptcy?

What would happen to General Motors stock if they were to file bankruptcy?

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The answer to your question is not a simply one--there are many things that could happen, depending on the type of case GM files and whether or not the corporation is liquidated or simply restructured and able to emerge from bankruptcy. If the company is liquidated by its creditors, common stock may become essentially worthless. Stockholders are the last people to be paid out of a company's liquidated assets, so only after all other outstanding obligations are paid would stockholders be repaid. In many cases, companies which are forced into liquidation have insufficient assets to cover their debts, so stockholders can be left "holding the bag." As unlikely as it may seems when buying stock in a massive corporation like GM, the possibility that you will lose all of your invested money is one of the risks inherent to investing in any business.

If, on the other hand, GM filed bankruptcy and was simply restructured, its stock would likely continue to be traded on the NYSE as normal, though its value would probably drop. Once it emerged from bankruptcy, your rights as a stockholder would probably remain unchanged. While in bankruptcy, stockholder rights are somewhat restricted because the creditors would have final say in approving any significant business decision.

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