My understanding is that whenever a company files chapter 11, they are starting the process of declaring bankruptcy. Having been a shareholder of Marvel Comics (back in the day) when they declared chapter 11, I learned first hand how shareholder value ultimately goes to zero.
So, here's the question. Why does anyone, ever buy stock in a bankrupt company? I was looking at 4Kids Entertainment (KIDEQ) - a company that has already declared chapter 11 - and see that the share price rose 22% today. Why would that happen? Is it simply that people are playing the price fluctuation? Is it possible that despite claiming chapter 11 a company can still come out of bankruptcy without wiping out all existing shareholder value?
In short, why would the stock in a chapter 11 company ever go up? That doesn't make any sense.
Thanks in advance.