Memo to Robinhood traders: “Bankruptcy” usually means the equity gets wiped out

Quick primer on how it works, given Hertz is about to pull the world’s first Initial Bankruptcy Offering:

  • The senior debt holders are first in line
  • Subordinated debt holders are next in line
  • Creditors, suppliers, vendors, including employees and pension funds are in this line
  • Equity holders (this means you) are the very last in line and they get a fraction whatever is left, which is often NOTHING

Good luck in the scramble to buy Hertz IBO shares, hopefully Robinhood doesn’t crash, yet again, under the load of brain dead traders scrambling for what will effectively be instantly worthless equity in this doomed company.


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