Everyone has a friend right now making a killing in the stock market. Tales of stocks doubling or tripling in a single day has created some major FOMO and you just started a position in some piece of shit penny stock that you have no fucking idea what they do but is up 45% today. You haven’t done any due diligence in the name but one thing lingers in the back of your mind. How are you supposed to know if the company is bankrupt or not?
Allow us to take you through the process of figuring out if the company you just heavily invested in is actually just full-on bankrupt.
The first thing for any investor is understanding what bankruptcy is. In the most basic terms, a company is bankrupt if they are totally fucked and can’t repay any of their debts. It’s like when you lent your brother all that money to buy Beanie Babies in the ‘90s and then they weren’t even worth the fabric used to make them two months later. He said he’d pay you back, but then he hightailed it to Reno and you haven’t spoken since. You miss your brother deeply, but you’re also pissed as all fuck at him. Bankruptcy is kind of like that.
Another strong tell is that while the company is up big in the last week, it’s down around 98% from its all time highs. Usually these stocks are good for some nice bounces before eventually heading to 0 and crushing speculators like yourself.
“But how can I know for certain that this piece of shit company is bankrupt?” you might ask. For this, all we need is a quick Google search for your company. The key things you want to look for are the terms ‘Chapter’ followed by either of 7 or 11.
These are great indicators that the company is absolutely going to zero and that your ‘investment’ will be going the way of your brother’s Beanie Babies. Speaking of which, you can at least hold onto them for comfort as you watch the shares in your brokerage statement inevitably get zeroed out.