I don't know much about shares and stuff, so I'm wondering how low can shares go before something to stop further fall is triggered (and I'm assuming something has to happen and there is no way for any company's shares to reach $0, right?)
Because whatever it is, I'm guessing it'll have to happen as soon as next week.
So that piece of debt is very critical at this point. The thing is nothing positive has been mentioned. Its been quite on the Sears side the stock keeps dropping. It just feels that BK might be announced sooner than we know it. Eddie hasn't opened his check book like he always did and loaned some cash. It just seems not much is their to take as collateral.
When a stocked is delisted they usually append a Q to stock call letters so SHLD will be SHLDQ. During a BK it has no value. If they come out from BK normally they throw old call letters away and come up with new one so not to associate with a losing and tarnished name. The likelihood your stock will have any value after the BK is zero.
My sage advice for you all is to stay away from any stock that is on the brink of bankruptcy. Not worth it.
Thanks for the answers. It's worse than I thought, I guess.
The debt due next week, if not paid, will trigger a BK which in turn will impact the stock. It can still trade but usually is halted at that point. That’s what happened to Sears Canada, when it fell under $1 they soon filed BK, the stock continued (SRSCQ) with “Q” added to the quote to indicate BK. So if you see SHLDQ it will be a bankrupt stock and no one will touch it.
There is nothing that will stop the price from falling and there is no mechanism to stop the fall, safety nets do not exist in the real world. It is rare however stocks can and do even go into a negative split. What happens when a stock gets under a dollar is this: 1. A delisting letter goes out to the company from the NASDAQ
2 the warning is that the company has 90 days to remedy the violation themselves
4 If these measures fail the stock is delisted
5 If bankruptcy is declared trading for the stock is halted
Unless you are willing to read every loan document thoroughly or are an insider you are unlikely to know. Some debt covenants are based on stock prices; which may have been breached. ABL covenants are backed by inventory levels and have probably already been breached. Loan covenants can be breached by simply defaulting on interest payments.
Any breach can result on a FITCH/MOODY's downgrade; and that could trigger an action.
They usually don't go below 0.
Real companies often have loan defaults triggered by low share price but this companies loans are a sham so....