chapter 11

[ou812]

what happens to stock if a company files chapter 11

[Buenchico]

Chapter 11 bankruptcy applies only to the USA. The Answerbank is based in the UK, so there aren't many experts on US law around here. You're more likely to get an accurate answer if you post on a US-based website, such as one of these:
http://www.answerbag.com/

http://answers.yahoo.com/

However, my understanding of 'filing for Chapter 11 bankruptcy' is that it's similar to 'going into administration' here in the UK. If so the shares (to use the UK terminology) or stocks (to use the US equivalent) become frozen. (i.e. they can't be traded). If the creditors agree to a rescue plan, the company can come out of administration (or Chapter 11 bankruptcy, as appropriate) and the shares/stocks can then be traded at their new market value. If no rescue plan can be found, the company goes into full bankruptcy (US) or liquidation (UK). At this point, the stocks/shares become worthless. [If it wasn't for the legislation (in both countries) relating to the ownership of limited companies, the shareholders/stockholders would actually have to pay out of their own pockets towards meeting the company's debts].

Chris