A U.S. company files for chapter 7 bankruptcy. A private company in Hong Kong buys the U.S company's IP and brand name to continue the company. The U.S stock ticker for the company still trades.

It is my understanding that the private company that bought the U.S company is still obligated to the U.S stock that continues to trade. Does the private company send a cease and desist letter in order to stop the old stock from trading? In a situation like this, what happens with the old ticker and the private company?

  • What are the names of these companies?
    – Flux
    Commented Apr 17, 2021 at 7:32

2 Answers 2


It depends. If the company is bankrupt and has ceased operations, it becomes a shell corporation in essence. The buyer of a corporate shell can delist all of the existing shares of the company (those shareholders get nothing) and reissue them in another IPO if they so choose. The proceeds from sale of the publicly traded "shell" are used to satisfy outstanding creditors who filed claims during bankruptcy.

This was once a great strategy used by small investment banking firms to take a tiny business public via over-the-counter markets like Toronto or Philadelphia. They were better known as penny or "pinksheet" stocks because in the old days their listings were printed on pink paper. These companies couldn't meet the listing requirements to be on the larger exchanges.

Using a corporate shell like this makes it easier and faster to become traded because the company doesn't have to go through the same laborious, expensive, and time-consuming process of being approved through the SEC as a company normally would that intends to be traded on one of the bigger exchanges. I once worked for such a firm, helping to do this.

  • Interesting interesting. So with your expertise in this field, does the buyer cancel those shells immediately or does it take some time? I'm looking into all this to see if a possible reverse merger is on the horizon. Only thing is is the BK companies ip and brand name were bought in 2018. it is now 2021 and of course like I said the old stock continues too trade. thoughts?
    – Kushimaru
    Commented Mar 18, 2021 at 2:10
  • Frankly I've been out of the business for awhile now, and I'm sure the rules have changed since then, no thanks in part to the 2008 financial crisis at least in part. Just because a company BKs doesn't void their stock in and of itself. The key is whether they've suspended all operations and are no longer a going concern. It isn't unusual to see what you're talking about, with companies that went bankrupt continuing to trade, although why is a good question. There's no basis to think the stock will somehow just "bounce back", right? (grin)
    – RiverNet
    Commented Mar 18, 2021 at 2:23
  • there is some basis river, I'm currently trying too identify a potential reverse merger play.
    – Kushimaru
    Commented Apr 19, 2021 at 2:56
  • Unusual. But interesting.
    – RiverNet
    Commented Apr 19, 2021 at 3:01
  • so you used to work doing all of this stuff correct? here is the current scenario: private company creates sub and buys ip and brand name from chapter 7 bankrupty shell company. I'm assuming it is a forward triangular merger due to 3 entities being invovled.
    – Kushimaru
    Commented Apr 19, 2021 at 4:19

Don't assume that buying the intellectual property and the brand name has anything to do with buying the company.

When a company is bankrupt, it may sell off any assets that are of value to raise money to pay the creditors. That could be land and machinery. It could also be intellectual property and brand names.

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