I'm new to favstocks and from Michigan

[bkgs]

I'm new to stock market forums, like the bankruptcy section and have a identified a situation!

I have stock pick not on an individual stock but a identifiable situation. It's to identify stocks like Kmart Corporation's bankruptcy when it declared bankrutpcty a couple of years ago its old stock went to zero. Some companies old stock will still have value but the company will tell you beforehand if it going to be let to go to zero. If it is short it!

What I don't understand is if there is no liquidity distribution when the stock folds and company no longer becomes a legal entity (this would take several years) when would I need to cover my short so I could get my money out.

I look forward to learning about situation likes this and if anybody can answer my question much appreciated.

[DogDayTrader]

When shorting, the company going bankrupt is the best case scenario. The only problem is that unless you cover your position before trading is halted, it will take some time as your broker will have to mark the security as having a "zero" value. At such time you would make a 100% profit. However, having never rode a short down that far, I'm not sure as to exactly how you would cover (as the security is no longer available for purchase or sale).

In my mind there are only two possible outcomes, your broker covers the position and funds your account with the proceeds or your broker stiffs you.

The best way to find out is just to ask your broker.

BTW: Welcome to the boards.