Considerations for Investors Before Investing in Bankrupt Companies

Abstract

Because the company is already in serious trouble once in Chapter 11, investing in a company during a bankruptcy proceeding poses serious risks, well beyond those arising in the normal course of business. Decisions must be made, often in a very brief period of time, regarding the position of the products in the market, the quality of management, the ability of the business to support additional debt, and many other issues. How to approach these topics is reviewed in this article.