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 in 2007.
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.