If there’s one word that traumatizes investors, it’s bankruptcy, and rightly so. Bankruptcies aren’t prominent, but they happen. You’ve probably heard of companies or individuals declaring bankruptcy. It’s not an ideal time because it means an individual or a company has reached financial insolvency. Most people try their best to avoid bankruptcy. However, what happens if you’re a shareholder in a company about to go belly up? Well, that’s not good.
It’s not uncommon for some organizations to file for bankruptcy after failing to pay their debts. For instance, the Administrative Office of the US Courts statistics shows that 13,160 companies declared bankruptcy in the 2022’s first quarter. This number decreased from the 14347 companies filing for bankruptcy in the fourth quarter of 2021, but it remains staggeringly high.Continue reading