Many people wonder why some companies declare bankruptcy and the answer is that there are many reasons why.The company declares bankruptcy because of the loss of a lot of money in the stock exchange, for example, or the reasons for not following security and safety in the retention of goods, or there is a dispute, for example between partners, on a matter of the company, declaring bankruptcy due to the withdrawal of one of the partners and so on.
The impact of bankruptcy on investors
Investors come forward to invest their money in companies through stocks or anything else, but you should expect the company to declare bankruptcy when you invest and venture and do not make the necessary government papers that keep out of danger you accept the risks you may face. When companies go bankrupt, it means that stocks and bonds are still going on, but at very low prices in trades, and if you are a shareholder, you can see a very pronounced decline in equities at the time before the company is declared bankrupt and the bonds are now considered undesirable.
When a company declares bankruptcy, it is an opportunity for investors to recover money at full value, but the strongest possibility is that you will get nothing at all.
Secured creditors have greater and better chances of recovering values for initial investments, but unsecured investors must wait until secured creditors are first properly compensated before receiving any compensation, but shareholders always receive little if they are compensated in the first place.