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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4545
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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we have stocks at BLOAQ and BLOBQ (blockbuster). They have

Resolved Question:

we have stocks at BLOAQ and BLOBQ (blockbuster). They have filed bankruptcy last year and then was bought by DISH in april. SEC suspended the trading on 9/29/2011 of these stocks. I bought the stocks on 9/28/2011, did I just lose my investment? Is it right that SEC or Stock brokers to allow trading of these stocks if they know that there is no value of the stocks?
Submitted: 6 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 6 years ago.

Dear Friend,


Well, the answer is both YES and NO. I will explain.


To begin with, you have not lost your investment.

When a company files for bankruptcy, it does so with an intention to "reorganize" its business. According to the SEC, if a business files Chapter 11, "Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court.". In this case the Management of DISH is expected to do so.


Now, coming to your question in specific, During Chapter 11 bankruptcy, the U.S. Trustee, the bankruptcy arm of the Justice Department, will appoint one or more committees to represent the interests of creditors and stockholders. The committee works with the company to develop a plan of reorganization to get out of debt. The plan must be accepted by the creditors, bondholders, and stockholders, and confirmed by the court. Once the plan is confirmed, a more detailed report must be filed with the SEC on Form 8-K.


During Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to "liquidate" (sell) the company's assets and the money is used to pay off the debt, which may include debts to creditors and investors.


So far as stock holders are concerned, kindly know that "Stockholders" are :"owners" of the company. They will have the LAST CLAIM on the money. They will get paid ONLY AFTER Secured and Unsecured Creditor's claim are paid off. If the money is insufficient to pay off the debtors, i.e. Secured and unsecured creditor, the stock holder may not receive his money and his investment is lost.


The following SEC page may serve as a good reference to you


I am sure this would help...
Warm Regards,

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