Question regarding bankruptcy of public companies

Discussion in 'Economics' started by Daal, Jul 21, 2007.

  1. Daal


    Lets say a company who holds a lot of their own stock, files for bankruptcy. Will their own shares qualify as 'assets' that will be distributed among shareholders?But since the company is also a shareholder of itself shouldn't the company be entitled to the same rights as a regular shareholder
  2. Ok, let's just say..

    A company has 100 shares total.

    Shareholders hold 80 of them

    The company holds 20 by itself

    Each share a shareholder holds is really 1.25 shares. Since the shareholders own the company, and the company owns it's own shares, the shareholders own the shares the company is holding.

    So yes, the company is entitled to part of it, and that goes to the shareholders.
  3. Daal


    I'm not sure thats right. Lets say the company decides to buy 99% of the shares. according to that logic the guy holding the last single share is the owner of the company, he increased ownership and took over the company but didnt do a damn thing, I supposed thats possible its just too strange
  4. Sure it is Daal, if you're the ONLY shareholder, you own 100% of the company.

    An entity can't own itself, someone has to be the owner of it.

    And in reality, as the company repurchases it's shares (provided the company's stable and profitable), every share that's purchased makes all the ones still publicly held more valuable. when you want to buy the 2nd to last share, you'd have to pay 1/2 of what the company's worth to get it.
  5. Daal


    a company is a legal person. I believe the last shareholder will CONTROL but not OWN, I dont claim im right though
  6. No, the last shareholder owns the company.
  7. Daal


    there would be two shareholders, one from a marketable share and the rest non-tradebale onwed by a legal person