An Introduction To Bankrupt Stock And Job Lots

By Author: Salvatore Andrea
Total Articles: 6261

If you are looking ahead to make handsome money in the bull and bear market but not acquaintained with the bankrupt stock and job lots then you may struggle a bit in the beginning and may fall prey to someone. You must have come across the news about the declaration of bankruptcy of some of the reputed companies that had share in the market. You might have been curious enough to know what happens to the stocks of bankrupt companies. Job lots is another investment term that will be highlighted in this article along with bankrupt stock.

In the case of the bankruptcy of the company, the stock itself becomes worthless leaving shareholders with defunct shares that cannot be sold. However, the shareholders may get their money from the share of company’s liquidated assets if there are any left over.

Thus, it is the only money left over from the firm’s liquidated asset, which could help the company in paying back the money to its shareholders. However, everyone who owned share does not get back the money at the same time. A strict order of debt repayment is followed and it goes like this government, financial institutions, other creditors (i.e. suppliers and utility companies), bondholders, preferred shareholders and, finally, common shareholders.

It is because of the residual claim on the assets in the firm and a low tier than the preferred stock classification; the common shareholders get their money at last.

Job lot refers to a particular contract dealing with smaller trading units than those mentioned in the regular contract. It provides a way for the small traders to enter into the market and participate along with the larger traders. Commodity futures trading is the most associated term with job lot. In fact, job lot can also be termed as selling of large quantities of items at low cost. It is used to quickly reduce the amount of stock of a particular item.