what happens to stock when company files bankruptcy
Written by James Hirby | Fact checked by The Law Dictionary staff. When a company files Chapter 11 bankruptcy, the company is restructured, not liquidated. In other words, the company remains open and develops a plan to pay its creditors.Unfortunately, corporate stock suffers almost certain death.ost of the time the stocks can no longer trade on The New York Stock Exchange or Nasdaq due to their low value. Shares of stock can be sold as over the counter stocks. The stock ticker will have a Q at the end of it to identify it as an OTC stock. An OTC stock does not have to meet the strict SEC listing requirements.