There seems to be an interesting misconception floating around that bailout => equity holders don't lose their investments. In the GFC, there were companies that got bailed out (GM, Chrysler) and after that failed, the Gov't (US and CA) wound up owning them. Equity went to 0.
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Does that all make sense? In both cases government got debt and equity. With car companies, they went bankrupt, common equity holders got wiped out, government lost money. With banks, they didn’t go bankrupt, common equity dropped in value but not 0, and government made money
Yeah I think it does, but there's an open question. What happens to a vanilla warrant (not attached to debt, if there is such thing) when the company for which the warrant is goes bankrupt?
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It goes away I think. It’s a warrant on a company that no longer exists. New GM just happens to have the same employees and IP as old GM, but you’ve got warrants for old GM stock, I’d think.
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You are good! I can't confirm this on Google but that totally makes sense :)
End of conversation
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