Lost a bundle in stocks when Co. came out of Bankruptcy.

[Dalrow]

What is the name of your state? Texas

I need some help resolving this issue. It’s driving me crazy. Here it goes: I purchased 10000 shares in Chesapeake Oil (CHK) at $3.32, in March 2019. Right after there was an analyst who gave CHK a Sell. Therefore, prices started to go down immediately. Later on CHK filed for Chapter 11 protection. They were under this and therefore changed their symbol to CHKQ. After about a few months, they somehow came out of it and now they are flying high. However, during the time they were under Bankruptcy they eliminated all my 10000 shares. My entire investment of $33200 has gone to dust. I wrote to them and they answered as if it's normal behavior to take the money and not give anything back. Questions: can they do this? What kind of law allows them also it has to be approved by the Brpt judge and why was it allowed. Long time ago, I had an employee stock purchase plan and I had bought a few thousand shares. They also declared Bankruptcy. The stock price dropped from mid twenties down to pennies. The Co. then came out of it, after it got bought out by a bigger co. Nevertheless the stocks shot up. CHK is doing the total opposite. The Brokerage firm did not help me either. If anyone can be patient enough to read my long drawn story and has some suggestions please do so. I am thinking of talking to a lawyer, but I want to collect as much infor b4 I can. So please give it a shot. Are they right? Is there some way I can get my money back. Thanks

 

[Zigner]

You lost your money because they went bankrupt. Their slate was (in a very general sense), wiped clean.

 

[adjusterjack]

I purchased 10000 shares in Chesapeake Oil (CHK) at $3.32, in March 2019.

Yeah, I remember when the crazy guy on TV was touting Chesapeake.

. However, during the time they were under Bankruptcy they eliminated all my 10000 shares.

Your shares were an unsecured debt of the company and last on the list to be paid, or not be paid if there wasn't enough money to go around during reorganization.

My entire investment of $33200 has gone to dust.

That's the risk you take when you buy stocks. Your investment can disappear in a heartbeat.

I wrote to them and they answered as if it's normal behavior to take the money and not give anything back.

That's understandably your perception of what happened but that's not what happened and I doubt that the answer you got said anything remotely like your perception.

Questions: can they do this?

Well, they CAN do it because they already DID do it.

What kind of law allows them also it has to be approved by the Brpt judge and why was it allowed.

The law that allows it is the US Bankruptcy Code, available online if you'd like to read it.

Long time ago, I had an employee stock purchase plan and I had bought a few thousand shares. They also declared Bankruptcy. The stock price dropped from mid twenties down to pennies. The Co. then came out of it, after it got bought out by a bigger co. Nevertheless the stocks shot up.

Sometimes it happens that way, sometimes it doesn't.

The Brokerage firm did not help me either.

The Brokerage firm had nothing to do with you losing your money.

If anyone can be patient enough to read my long drawn story and has some suggestions please do so. I am thinking of talking to a lawyer, but I want to collect as much infor b4 I can. So please give it a shot. Are they right? Is there some way I can get my money back.

No. It's done. It's gone. You'll just have to move on with your life and find another way of investing your money that's safer than the stock market.

I, too, have lost money in the stock market. More money than you did. But I accepted the fact, going into it, that I could lose everything in a heartbeat. In fact, my brokerage had me sign papers that I understood the risk before I could open the account. I'll bet you did, too.

 

[doucar]

In a chapter 11 bankruptcy, the first thing that happens in most cases, is the common stock holders are wiped out. Sometimes the stock gets converted. but rarely. In the case of the ESOP, that is a protected retirement plan, usually protected by ERISA and they can be required to maintain it if they want to come out of the bankruptcy and stay in business or be purchased by another business.

 

[Taxing Matters]

My entire investment of $33200 has gone to dust. I wrote to them and they answered as if it's normal behavior to take the money and not give anything back. Questions: can they do this? What kind of law allows them also it has to be approved by the Brpt judge and why was it allowed.

Yes, they can do that and in a corporate bankruptcy that is very, very common when the corporation is insolvent. Jack is not correct in saying that common stock is an unsecured debt of the corporation. It's not debt at all. It's ownership in the company. The owners have the very last claim on corporate assets, even behind the unsecured creditors. When a corporation is insolvent that stock has no value anyway because there isn't enough in assets to fully pay the creditors. And if the creditors can't all get paid, the owners get nothing. In a reorganization therefore it is common that stock gets canceled and to make the reorganization work some group of creditors and/or new investors is willing to take ownership of the corporation. The creditors exchange their debt for the stock they receive, which relieves the corporation from having to pay it, and any new investors inject new money into it. That's part of how the corporation is able to emerge from the bankruptcy solvent and able to move forward, hopefully profitable. The bankruptcy court does approve the reorganization plan. But the old shareholders are left behind because, again, their stock was basically worthless when the bankruptcy started. It was the fact that the company was insolvent that lead to your loss. And that's why the judges approve the plans that end up retiring your stock and instead handing over the company to a new group of owners who are effectively putting more money into it to save it. Nothing you can do about that. That's part of the risk you take when investing in stock. You may want to read the U.S. Securities and Exchange Commission (SEC) page investors about corporate bankruptcy for an overview of this.

However, once your stock was canceled and became worthless you are entitled to deduct a worthless stock loss on your federal income tax return. That doesn't recoup your loss, but might take a little of the sting off of it.

 

[despritfreya]

Ditto to all of the above responses. Moral of the story. . .

Playing the stock market is no different than going to a casino and playing the tables. Sometimes you win, sometimes you lose. You play with what you can afford to lose. If you can't afford to lose, you don't play the game.

Des.

 

[not2cleverRed]

If anyone can be patient enough to read my long drawn story and has some suggestions please do so. I am thinking of talking to a lawyer, but I want to collect as much infor b4 I can. So please give it a shot. Are they right? Is there some way I can get my money back. Thanks

Suggestions:
1) Learn more about the what you're investing in before diving in.
2) D I V E R S I F Y.