what happens to gm stock in bankrupcy

[student trader]

Hi, This is probably a crazy question, but I'm wondering exactly what happens to gm stock price if they go into bankrupcy. Does it go to zero and you lose anything you'v invested; or does it just 'go low' during the bankrupcy and recover with the company?
Any input would be appreciated! Thanks

[Fredledingue]

Bankrupcy often means that common stocks lose all their value. However they don't go to zero.
They are still traded on the Pink Sheet (because they are not compliant with Nasdaq or NYSE anymore) at a tiny fraction of their value before bankrupcy.
e.g. GM trades at $2 today, during bankrupcy they will trade at 0.05 or something.
It's realy a game to trade a bankrupt stocks because, literaly there is no value in it.

After reorganisation under Chap 11, there is a new company with a new stock offering, and the old shares are not traded anymore and at best, exchanged for a very symbolic sum (like one cent per share) or for a symbolic new stock distribution (like one new share for 500 old shares).

It's an exception when common stock holders get something more than that. And GM is certainly not an exception.

HTH

[Novice Investing]

Taxpayers has been quite fed up with federal bailouts. Even GM bond's holder may not get all their money back in bankruptcy. Let alone, common shares. In my opinion, the chance of GM shares becoming worthless in the event of bankruptcy is 99%.

[Fredledingue]

Every passing day the new GM CEO is saying more clearly that they will file for bankrupcy. He goes creshendo thought, but that's what he is preparing us to.