Most American companies don’t just run out of money and close the doors with a shrug. Bankruptcy cases involve selling assets (including brands, employment, etc) to other investors.
Original shareholders lose all their money, as the shares are deemed worthless (debt>>assets). Then new investors want to buy the remaining assets and have to pay the government (or other debt-holders) back for the debts (or the “fair market value” of the assets).
There is no guarantee that this process with oust management, but the new owners may not believe in the ability of the old management after they bankrupted a company. Realistically, companies sometimes go into chapter 11 knowing it’s not the end just to restructure debt.
Original shareholders lose all their money, as the shares are deemed worthless (debt>>assets). Then new investors want to buy the remaining assets and have to pay the government (or other debt-holders) back for the debts (or the “fair market value” of the assets).
There is no guarantee that this process with oust management, but the new owners may not believe in the ability of the old management after they bankrupted a company. Realistically, companies sometimes go into chapter 11 knowing it’s not the end just to restructure debt.