A company’s stock most likely will continue trading after a Chapter 11 bankruptcy filing. However, it often gets delisted from the Nasdaq or NYSE after failing to meet listing standards. If the stock is delisted from one of the major exchanges, it may trade on the Pink Sheets or OTCBB.

Stocks with a low market cap are more likely to be mispriced after a bankruptcy. What’s more, stocks with low market caps and liquidity are often ignored by vulture investors and, therefore, may represent better values than those already picked up.

In this period, the company cannot transfer its assets or raise cash by itself, no creditor or any other lender can initiate any legal proceedings or enforcement against the company. The common stockholders’ shares may reduce in value as the restructuring under insolvency affects the company’s share price.

A drop in price to zero means the investor loses his or her entire investment – a return of -100%. Because the stock is worthless, the investor holding a short position does not have to buy back the shares and return them to the lender (usually a broker), which means the short position gains a 100% return.

A company’s stock does not necessarily become entirely worthless if they file for bankruptcy. Under Federal bankruptcy laws a company can file for Chapter 7 or Chapter 11 bankruptcy. In this case, the stockholder would not necessarily need to sell the stock to have it considered worthless.

If a company goes bankrupt and owes you money, you will receive a notice from the bankruptcy court detailing the action. That notice will include instructions for filing a proof of claim. To receive notice of bankruptcy and a proof of claim form, the business that is declaring bankruptcy must list you as a creditor.

Stock values are adversely affected by bankruptcy speculation, and even more so by the actual filing. After filing for Chapter 11, the company’s stock will be delisted from the major exchanges.

When you know for certain that a company has gone out of business and you haven’t got what you paid for, you can try to get money back by: registering a claim as a creditor – fill out the form with details of what you are owed and send it to the administrator dealing with the trader’s debts.

Company Won’t Give You a Refund? Here’s How to Get Your Money Back

1. Try to Work it Out with the Merchant First.
2. Option 1: Request a Chargeback.
3. Option 2: Consider Mediation.
4. Option 3: Sue in Small Claims.
5. Option 4: Pursue Consumer Arbitration.
6. FairShake Can Help Make Arbitrating a Breeze.

Can a Store Refuse to Give a Refund According to Federal Law? There are no federal laws that require a merchant to refund money unless the product they sell turns out to be defective, despite the federal consumer protection regulation enforced by the Federal Trade Commission (FTC).

So what is the time limit a company has to give you your money back? You’ve guessed it—it depends. You usually have to demand a refund between 30 and 60 days, and a chargeback even up to 120 days with some credit cards.