Filing Bankruptcy with little to no consequence


This is not a post on how to personally file bankruptcy and get away with it, although I may be inspired to write about that one day.  This article tells a story in the eyes of a speculative investor who invested in a company who he thought had potential despite all the company’s financial position.  Well, I’m making that sound a little dramatic but it’s pretty much true.

A couple of years ago, I decided to write a post about purchasing stocks online.  Growing up, the purchase of stocks was a mystery to me.  I never fully understood where an individual could buy stocks.  Scottrade, E*Trade and ING Sharebuilder were never around.  They gradually starting appearing when I was in college.  Years after I graduated I decided to look into that aspect of investing a little further.  That’s when I opened an account with ING Sharebuilder and made three purchases.  One of my purchases was Java.  It took a few months before I stopped logging in periodically to check gains and losses and shortly after I completely forgot about my Sharebuilder account.  That is until I heard that Oracle had bought out Java.  Well actually I still didn’t access my account until a couple months after to see what had happened to my stock.  The result was a cash buy out that netted me a loss but a few extra bucks (less than $20 I think).

So the money was deposited into my Sharebuilder account.  I could either withdraw it or repurchase another stock.  So shortly after I bought Blockbuster for $0.04 / share.  I thought if it ever reaches 50 cents or even a dollar; Money well spent!.  At that point Blockbuster was trading as BLOAQ.PK (penny stocks/pink sheets).  They advertised this ticker on their website (Blockbuster.com).  Blockbuster has been an icon in movie rentals, I said to myself.  Despite all the other competition, it’s possible that they’ll ride this out and prosper in the future.

Well prosper they might.  After all DISH network bought their assets, business and their brand, “Blockbuster”.  You can read the SEC filing here: http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=7834744 or view the excerpt below.

So where does this leave the Original Blockbuster, its creditors and equity holders?  Well Blockbuster was able to continue being a going concern eventhough DISH essentially purchased a company. DISH was able to do it without also absorbing their liabilities.  In addition to that, since DISH did not purchase the stock of the company, the former Blockbuster still remains, although in reality it’s just a shell of a company.  There also doesn’t seem to be any real value behind it.

So as a result, the SEC halted trading on BLOAQ stock.  The former Blockbuster is now BB Liquidating Inc.  Whatever creditors they had are now sh*t out of luck.  And of course investors that had a gleam of hope for the company, well they’re stuck with worthless stock that may not be worth the paper it’s certificate is printed on (regardless of the number of shares).

So as of today, below is a snapshot of the value of my 227 shares of BB Liquidating Inc (formerly known as Blockbuster) stock. =)  Lesson learned.

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