
When companies are owned by the public through shares of stock, the company is known as a publicly held company. The individuals who own shares in the company are known as shareholders and these individuals are partial owners of the company. Increasingly, shareholders are demanding a say in their companies' bankruptcy choices.
A recent piece published by the Wall Street Journal discusses this phenomenon, which is occurring primarily with shareholders of energy, coal, and other commodities-based companies. In many cases, companies that file for Chapter 11 bankruptcy are sold at prices that cannot cover their debts, leaving shareholders with nothing. In the cases discussed in the piece, shareholders are standing up for their rights to at least have some say in their companies' negotiations, stating that these companies are often worth more than they are sold for and that if they were sold for fair prices, the shareholders could potentially recover some of their money. They also state that they should be able to have their interests represented in cases where there is a problem to blame for the company's failure, such as mismanagement.
What Happens if Shareholders are Given a Say in Bankruptcy Proceedings?
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