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<p>[QUOTE=&quot;fatima, post: 1338760, member: 22143&quot;]This one is easy.&nbsp; Common stock holders are considered lower than creditors of the company,and not owners of the company&nbsp; This is why the stock has no intrinsic value.&nbsp; </p><p><br /></p><p>A company claims bankruptcy.&nbsp; Common StocK goes to $0. The company still has hard assets, it may still have a viable business that makes money, but the common stock goes to $0. Common stockholders are considered lower &quot;creditors&quot; of the company not &quot;owners&quot; by the bankruptcy court.&nbsp; This distinction is very important because normally in a bankruptcy it&#039;s the unsecured creditors and common stock holders who take all the hit.</p><p><br /></p><p>This is directly from SEC.GOV </p><p><br /></p><blockquote><p>Note: Investors should be cautious when buying common stock of companies in Chapter 11 bankruptcy. It is extremely risky and is likely to lead to financial loss. Although a company may emerge from bankruptcy as a viable entity, generally, the creditors and the bondholders become the new owners of the shares. <b>In most instances, the company&#039;s plan of reorganization will cancel the existing equity shares.</b> This happens in bankruptcy cases because secured and unsecured creditors are paid from the company&#039;s assets before common stockholders. And in situations where shareholders do participate in the plan, their shares are usually subject to substantial dilution. </p></blockquote><p><br /></p><p><br /></p><p>Thus, if something can be made worthless with the stroke of a pen, then it has no intrinsic value beyond the paper and ink that make it up.&nbsp; (or a few electrons)[/QUOTE]</p><p><br /></p>

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