Why do some corporations run in debt, state stock worthless?

While others start over again, and dispense previous stockholders a stake surrounded by the brand new company?

Shouldn't it be alike proceedure for adjectives corporations?

Examples:

L.A. Gear sued over contaminating squander sites beside aged shoes containing mercury (lighted kid's shoes). Stock worthless.

New company:Sketchers.

Trump stock go through liquidation, issued modern stock which also is a loser.

Phillip Morris be on the skids ten years ago, overwhelmed next to tobacco lawsuits.

They raise cigarette prices, and presently look at the results...

Stock go up six times what it be, changed mark to Altria, contained by process of spinning past its sell-by date divisions.

Answers:
The smooth answer is that sometimes the debt ratio is lately too giant to remain in business. The creditors and/or member of staff union demur the offer to settle, and check out of the company no choice except to totally dissolve.

When a company enter collapse institute, the creditors and the member of staff union (if any) hold to approve settlement deal within decree for the company to save the doors widen. And some culture settle on that 100% of nought is better than 10% of something.

In other cases, the creditors, vendor & union see a bigger picture and realize allowing the company to stay stretch out is more significant that a few extra dollars within payouts. What you don't gain in the settlement can be made up in the adjectives.
Part of the answer deal near the intelligence of the control and central backer.

Another section is the financial talent to avoid or come out of liquidation.

A third factor is that the prospects of returning to solvency is better for some than others.

Fourth is that some smart investors close to to buy the stock when it is low and after see it increase as the company recover.
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