What can happen to the bankruptcy of a listed company?

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This is a procedure that can cause more than one obstacle on the part of investors since the bankruptcy of a listed company is one of the most serious things that can happen on the stock market. Well, even if the shares are not listed on the financial markets, investors will still receive a annual fee from your bank por la comisión de custodia. Sea cual sea el caso, esta etapa del procedimiento implica la suspensión de la negociación, que puede ser temporal o definitiva, en cuyo caso se perderá el dinero de la totalidad de la inversión.

One of the advantages of fixed income products, not all, is that the investments are covered by the Deposit Guarantee Fund (FGD) in the event of bankruptcy or disappearance of the depository entity. With a maximum limit of up to 100,000 euros per holder. This protection measure, on the other hand, is not present in the sale of shares on the stock market. But on the contrary, investors will lose all the money they have invested in the listed companies affected by this exceptional business event. Even though it also usually generates a series of problems in its administration despite the fact that it is no longer listed on the stock exchanges and it will be a headache for retailers.

Although exceptional, some Spanish stocks have gone through this stock market crisis and have led small and medium investors to lose their savings in a few hours. Martinsa and Reyal Urbis they have starred in some of the biggest bankruptcies in recent years. While Renta Corporación was suspended from listing demanding a suspension of payments. Like other companies listed on the Spanish continuous market, such as La Seda de Barcelona or Sniace. As a result of these situations, hundreds of small shareholders have been trapped in their positions. In some cases, to never return to the stock exchanges, and in others to quote years later, even when prices are below the levels prior to their listing on the stock market.

Bankruptcy: suspension of listing

It is a procedure, in which if they are not listed again in the markets, has no turning back. In other words, the shareholder loses all his invested money basically because there is no longer a financial asset that is listed. The shares are excluded and therefore lose all their value. In a context in which the National Securities Market Commission (CNMV) makes the decision to suspend a security "Due to the occurrence of circumstances that could disturb the normal development of operations". However, when this action occurs by the regulator, the price of the shares has fallen significantly until reaching minimum levels in the quotation. Where, some investors close their positions with heavy losses for fear of greater evils.

In this scenario, two situations can occur. On the one hand, that a few days later the shares are quoted again in the financial markets, even when their prices are heavily discounted. Or even that they are immersed in bankruptcy processes that entail several months or years of suspension. And on the other hand, in the worst case, they will never change their price in the markets again. In any of these situations, shareholders are helpless and can only wait for the situation to be resolved with the only hope of recovering a portion of their investment.

Expenses that will continue to be spent

Of course, there are few self-defense mechanisms that they have, since the only opportunity to get some liquidity from their shares in listed companies lies in reaching individual agreements. This action necessarily goes through a exchange of securities in secondary markets. However, it is a surely complex operation given the lack of interest on the part of potential buyers. And if it is formalized, it will always be at a price much lower than that set by the markets in its last price.

Another of the serious problems that this scenario implies is that even when the shares are not listed, the depositary bank will continue to charge the custody commission. It's not that it's very high between 5 and 15 euros a year approximately, but it will be a bank charge that will have to be faced every year and until the situation is resolved.

Scenario that has been developed

Whatever the case, it is not necessary to fall into despair since there are cases of recovery, even when many years have to pass. One of the clearest examples is the one represented by Sniace, which after almost three years of stock market inactivity returned to the stock market. With a revaluation of 155%, to achieve levels of 0.5 euros per share. The shareholders of Martinsa-Fadesa were not so lucky that after the suspension of payments, the shares were excluded and therefore lost all their value.

For these reasons, one of the keys to minimizing this situation is a correct diversification of investments. It is not advisable to risk money and invest it in the same basket because you run the serious risk of running out of savings overnight and unnecessarily. Something that they could avoid developing a correct and balanced investment portfolio. From this dynamic, you will only lose a small part of your personal or family assets.

Signs that give more warning

Whatever the case, there are some signs that can occur that indicate that you are facing this situation so negative for your personal interests. Of course they are not easy to detect y necesitará algo de experiencia en operaciones impulsadas desde los mercados de valores. Para que de esta dinámica cierres las posiciones para que las coyas no vayan a más. La strategy para este caso se basaría en realizar ventas con total urgencia, inclusive con pérdidas más o menos elevadas. Debes pensar que al final del día puedes perder todo. Siempre es mejor perder una parte de su dinero que toda la operación. Esto es algo que debes hacerse cargo a partir de ahora.

Another of the most relevant aspects of this complicated procedure is that which has to do with the choice of the listed company. Because in effect, they are those of small cap Those most likely to develop this monetary deficiency for an extremely simple reason to understand is that they have a higher level of indebtedness. And therefore, they can generate this situation at any time. Of course, this scenario is less common in the companies that make up the benchmark index of the Spanish Stock Market, the Ibex 35. For reasons that are very easy to understand for small and medium investors.

Strategies to use

If for any reason you find yourself immersed in any of these processes you won't have many self-defense mechanisms para salir de ellos. Pero en todos los casos te será de gran ventaja adoptar una serie de prioridades para defender tus intereses de la forma más correcta factible. Con un target muy claro y que no es otro que preservar al menos una buena o pequeña parte de tu capital monetario. Para que de esta dinámica, no te dejes todo el ahorro por cierto que es el peor de los escenarios que se te pueden presentar a partir de ahora.

The first action you can take when a listed company fails is to anticipate this business move. How? To any sign that this scenario may happen, your immediate reaction is trade the shares at market price. Not through partial sales but for the total amount of the operation. Without waiting for you to spend many days because it may already be too late to save part of your savings.

Wait for them to quote

A second strategy is based on having to wait for the shares to return to trading on the financial markets. As has happened with Sniace's chemistry a few years ago. However, this clearly passive movement involves many risks for your interests as an investor. Mostly because I may never quote again And in the best of cases, it may be many years before they regain access to the stock markets. This is only one strategy that you can use if your investment is not high. In these cases, you may want to risk a little in your positions.

At another level is that you try to exchange the securities in the secondary markets. But this movement is always somewhat complex and occurs at prices that are below the value of the shares. But at least you won't be without the savings invested from the start. On the other hand, it is possible that you will not find any buyer in this type of very special financial markets. Because there is a huge mismatch between supply, supply and demand for your shares. But whatever the case, it is very clear that you will have to make a decision in these types of scenarios.