GM warns about bankruptcy implications on stock
General Motors Corp., which is operating under bankruptcy protection,
warned investors again Wednesday that it believes there will be no value
for common stockholders once the court process has concluded.
In typical cases, existing shareholders are wiped out once a company
emerges from bankruptcy. That was the case when Delta Air Lines Inc.,
the world's biggest airline operator, emerged from Chapter 11 protection
GM said it has noticed continuing high trading volume in GM's common
stock at prices in excess of $1.
"GM management continues to remind investors of its strong belief that
there will be no value for the common stockholders in the bankruptcy
liquidation process, even under the most optimistic of scenarios," the
automaker said in a statement.
"Stockholders of a company in Chapter 11 generally receive value only if
all claims of the company's secured and unsecured creditors are fully
satisfied." it said. "In this case, GM management strongly believes all
such claims will not be fully satisfied, leading to its conclusion that
GM common stock will have no value."
In over-the-counter trading Wednesday afternoon, GM shares were at
around 96 cents.