Total NOOB Question

[Slow Play Ray]

When a company comes out of Chapter 11 protection, does the stock generally go up immediately?

I apologize if this is a stupid question; I am very green when it comes to the market.

[Sniper]

This would be very dependent on what deal was worked out to bring the company out of chap 11.

[tek]

Usually the previous common stock becomes wallpaper. The former bonds and preferred (if any are converted into "new" common stock.

[Cazz]

Just to add a little more to what the others have said:

When a company files for Chapter 11, the creditors
have to be paid off before the owners. Since w/ a BK
company the liabilities exceed the assests, there
is almost never anything left over for the stock
holders.

Since a company is often more valuable as a business
than selling off the assets for scrap value, the
creditors will take ownership of the company as
compensation. The bankruptcy judge determines
who gets paid, how much, etc. He can order the
sale of assets and must approve any actions
the company takes. As part of the exit from
BK, the old stock will be cancelled and new
stock be issued. For a large company, the new
stock will often be traded on the stock
market under a new symbol. Until the old
stock is cancelled it can still be traded
over the counter, but barring a major miracle
it will be worthless.


This is from the UAL FAQ on the United web site:

What does it mean that the common stock will be cancelled? Why aren't current common stockholders receiving anything under the Plan?
As the company said would likely be the case for some time, the proposed Plan stipulates that UAL's current Common stock will be terminated and cease to have any value. Unfortunately, current stockholders are unable to receive any distribution because under the law, stockholders are only entitled to receive anything for their equity interests after most creditors are paid in full, which will not be the case. The Reorganized United will issue new stock to its new shareholders pursuant to the Plan.

[Slow Play Ray]

[ QUOTE ]
Usually the previous common stock becomes wallpaper. The former bonds and preferred (if any are converted into "new" common stock.

[/ QUOTE ]

I could be mistaken, but I don't believe there is going to be a "new" stock in this case, as they came up with a financing plan to come out of Chapter 11...the specific stock in question is CPTCQ, if that helps.

I just believe in their technology and want to keep this stock as a long-term invesment. But if it shoots up significantly when the "Q" is removed, I would probably like to dump enough to get my initial investment back, and retain the rest for long-term growth.

Keep in mind - I am truly a noob, so please be nice if I am being asinine. [img]/images/graemlins/grin.gif[/img]

[Sniper]

Irvine, CA, October 25, 2005 - Composite Technology Corporation (CTC) (OTC Bulletin Board: CPTCQ.OB),
a leading developer of high-performance composite core cables for electric transmission and distribution lines,
today announced that the hearing to decide on the approval of its Chapter 11 plan of reorganization commenced
yesterday in front of United States Bankruptcy Judge John Ryan. Since there was insufficient time to hear all of
the testimony of witnesses addressing plan confirmation issues the case will continue on Friday, October 28,
2005 at 9:00am and if necessary, possibly on Monday, October 31, 2005.
About CTC:
Composite Technology Corporation is an Irvine, California based company providing high performance
composite core conductor cables for electric transmission and distribution lines. We believe our novel
proprietary ACCC cable is superior to existing conventional conductor products of the same diameter in a
number of key performance areas, including: Up to double the current carrying capacity of conventional cables;
virtually eliminates high-temperature sag; uses conventional installation methods and tools; reduces construction
costs on new lines by requiring fewer structures; may be retrofitted on existing structures to increase current
capacity; non-corrosive core; eliminates bi-metallic corrosion; and reduces line losses, compared with same
diameter conventional cables, at same operating temperatures. More information can be found at
www.compositetechcorp.com or by contacting James Carswell, Director of Investor Relations, at 760-416-8628.

[Sniper]

[ QUOTE ]
I just believe in their technology and want to keep this stock as a long-term invesment. But if it shoots up significantly when the "Q" is removed, I would probably like to dump enough to get my initial investment back, and retain the rest for long-term growth.

[/ QUOTE ]

When did you buy the stock?

[Slow Play Ray]

Yeah, I've seen all of their press releases...but what does that mean specifically to this conversation?

I only bought it 3 weeks ago, why?

[Sniper]

Just wondered what your cost basis was on the stock.

The reason I posted the release was that anyone following this stock will be looking for some certainty as to what the reorganization will look like after the bankruptcy proceedings. Smart money will act based on the information coming out of that proceeding.

[Slow Play Ray]

I see.

Thank you for the information.