Are there any signs that a public company is about to go bankrupt?
Jan Meriss Alfonso Assistant at Ascent Law LLC Investing in Bankruptcy Stocks There are several signs a company might be in trouble. If you notice a company has been defaulting on its debt covenants or has recently had unfavorable terms from its lender, then you should probably avoid it. While this is not a surefire sign of bankruptcy, you should be cautious. Investing in a bankrupt company Investing in a bankrupt company requires knowledge of the bankruptcy process and the rights of creditors. Moreover, bankruptcy decisions need to be made in collaboration with the other creditors. The motives of creditors vary, and they are often dependent on the nature of the debtor company's business. However, if their motives complement each other, bankruptcy can be a profitable venture. On the other hand, incompatible motives can cause infighting and delay, and that will reduce the final value of the enterprise. Avoiding bankrupt stocks Investing in bankrupt companies is very risky, and ban...