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BVTI & Chapter 11
What are the chances that BVTI will go wipe the common shares during it's current restructuring? Product looks great but the Chapter 11 (Reorganization) does not.
here is a chart...
FYIOriginally Posted by Bio
As a general rule once a company files for chapter 11 bankruptcy their stock will continue to trade, but will probably be de-listed from their current exchange (AMEX, NYSE etc.) as they can no longer meet the listing requirements. Once the company emerges from bankruptcy it will issue new stock and the tow securities may trade in tandem for a time. Investing in a company that has filed for bankruptcy is extremely risky and should not be taken lightly. You should also remember that as a stockholder you are last in line to see any type of reimbursement if the company does indeed fail and roll over into chapter 7 bankruptcy (liquidation).
However, this is not to say that one can't make money by investing in a company that just filed for bankruptcy. Take for example GM, when they filed for bankruptcy their stock sank to around 0.50 and a week or two later it was over $1 (this of course was before they were taken over by the US government). I myself was able to make almost a 200% return on Nortel by buying right after they announced filing for chapter 11 and selling a few months later.
The SEC has a page dedicated to Chapter 11 bankruptcy and can be found here for a more complete explanation:
Corporate Bankruptcy
"The only thing that interferes with my learning is my education." - Albert Einstein
Dogtrader
what do yo think about thist stock....the fact that there is that potential for their emergence (from bankruptcy) with their current share holders. If they do file a BLA this stock could potentially be in the $12 to 20 dollar range ....is this a billion dollar dug yes, frankly speaking this could be a massive opportunity unfortunately they seem rather disorganized (investor relations).
Cheers
A company that manages to survive after declaring bankruptcy i wonder are they obliged to honour their shareholders that held the Stock with the letter Q.
Is that one reason to hold onto your shares of a chapter 11 company.
From the link that you didn't read.
"Note: Investors should be cautious when buying common stock of companies in Chapter 11 bankruptcy. It is extremely risky and is likely to lead to financial loss. Although a company may emerge from bankruptcy as a viable entity, generally, the creditors and the bondholders become the new owners of the shares. In most instances, the company's plan of reorganization will cancel the existing equity shares. This happens in bankruptcy cases because secured and unsecured creditors are paid from the company's assets before common stockholders. And in situations where shareholders do participate in the plan, their shares are usually subject to substantial dilution. "
In most cases the old shares (the "Q" shares of common stock) will be worthless once the company emerges from bankruptcy and new shares from the newly reorganized corporation will be issued. In some cases you may receive shares of the newly issued stock, but this is rare as common stock shareholders are last in line to receive any type of compensation.
IMO one should only hold Q stocks for a limited time to make a quick profit. You should also monitor the progress of the bankruptcy proceedings (if possible) as once the proceedings draw to an end there will most likely be a huge sell-off and if you don't participate to protect your profits (if any) you will be left holding the bag. This is course is my own opinion and only based on my personal experiences with bankruptcy stocks. If you do wish to try your hand at Q stocks do your research and don't get greedy, once you have a decent profit dump them and move on to the next trade.
spunk: As this stock is not currently on my radar and since you asked, I will look into it and give you my opinion.
Last edited by DogDayTrader; 01-20-2010 at 09:00 PM. Reason: clarity
"The only thing that interferes with my learning is my education." - Albert Einstein
Thanks Dogtrader
Hi DogDayTrader,
May I also join and look forward to your opinion too. Thanks.
I don't realize that BVTI is in the banckrupty till I read it here.
Just bought few days before the news that they got Orphan Drug Status from FDA. Seems to me that the potential reward is worth the risk (my previous opinion).
Thoughts on BVTI
Since some of you have asked my opinion, I present it for your inspection. As always you should never blindly follow the advice of others on how you should invest your money and you should always do your own research.
Thoughts on BVTI . . .
General Impression: Although they recently filed for bankruptcy protection, they seem to be trying to get themselves back on track. Their product, if approved, could provide a solid revenue stream for years untill their orphan status expires. All in all they look like a lot of other young, developmental stage drug companies. The approval, or disapproval, of their lymphoma vaccine could very well make or break them.
IMO, those looking to enter this one should wait until the 200 day MA is retested, and if it holds try to enter aground the 200 MA (assuming it is still rising). Make no mistake, this is a long play and no significant price jumps will occur until news comes out about their filing for FDA approval, or their counterparts in Europe or Canada.
-: Fundamental :-
Financial: They recently, voluntarily filed for protection under chapter 11 of the bankruptcy code; which is better than a non-voluntary filing. From their lastest 8-K filing dated Jan 20th 2010 they appear to be keeping their head above water. They are actively selling their product and paying their creditors, with enough money left open to keep the doors open for another month.
Note: Their long term debt was not investigated and therefore not taken into
account in my brief summary.
Outstanding Shares: 96.45M
Short Interest: Declining past 3 mo. (a Dec. decline is not unusual as shorts not
wanting to carry over positions to next year)
Product: They were recently granted orphan status by the FDA for their drug BiovaxID, a good sign and the first step towards marketing an original, viable drug. However, it still does have to be approved by the FDA to be distributed in the US. Biovest is also seeking approval in Canada and Europe. Cancer medicine is big business and if approved, Biovest will have a seven year head start on marketing (this particular drug).
Other: Nugget from their PP presentation that can be found at the link below.
"Committed to ensuring the preservation of existing shareholder base (common shares NOT canceled)"
-: Technical :-
Price Movement: Recent FDA orphan drug status has propelled their pps above both their 50 and 200 day MA's on strong volume. Both the MA's mentioned are rising and the 200 day MA has been tested once and looking at a two year chart they have no overhead resistance left to overcome.
However, over the last 3 weeks the pps has settled into another trading range of 0.63 - 0.74.
RSI: Has been declining for last 3 weeks, but showed signs of strength during the recent price breakout and is still above 50.
MFI: Has also been declining since the breakout, but prior to was steadily rising; a good sign that buyers were willing to invest their money.
MACD: Recently crossed over to the downside.
Link to a PP presentation they recently released: BIOVEST INTERNATIONAL INC (Form: 8-K, Received: 01/13/2010 12:11:23)
"The only thing that interferes with my learning is my education." - Albert Einstein
MY Instincts tell me that they are gonna find a partner for the drug to cross the final hurdle and the only reason that share holders have not been cancelled out is to create enough interest to dillute (raise funds substantially to pay creditors). My 2 cents , i smell a sudden increase over the next month and ressurgence from bankruptcy and then multiple dillutions
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