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GM: Any Recovery For Common Shareholders 'Highly Unlikely'

DOW JONES NEWSWIRES

Despite recent increases in its share price, General Motors Corp. (GMGMQ) said Wednesday evening that "any recovery for the common stockholders in the Chapter 11 bankruptcy process is highly unlikely."

Shares rose 6% to close at $1.59 on Wednesday and have more than doubled since the Detroit auto maker filed for bankruptcy protection June 1. The shares had fallen to 27 cents that day.

While noting GM does not control the market or its stock price, the company pointed out that stockholders of a company in Chapter 11 generally receive value only if all claims of the secured and unsecured creditors are fully satisfied.

Usually, the value of common shares is reduced to zero.

GM's common shares were suspended, then delisted by the New York Stock Exchange after the bankruptcy filing. They now trade on the Over The Counter Bulletin Board under the ticker symbol GMGMQ.

The phenomenon of stocks guaranteed to be worthless that nonetheless boggle the mind by trading at $1 or higher is nothing new on Wall Street, but the explanation remains as elusive as ever.

Investors who own worthless shares can write off the losses in some cases as though they had sold them, tax experts say.

GM shares apparently qualify for the write-offs, tax analyst Robert Willens says in a note published Friday titled "Is G.M.'s Stock 'Wholly Worthless?'"

-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com

  (END) Dow Jones Newswires
  06-10-091854ET
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