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16-Aug-2019 00:35

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At the time of your initial purchase, you must meet the initial maintenance requirement of 50 percent equity, meaning if you buy ,000 in stock you must put up at least ,000 yourself.

If your equity ever falls below the minimum maintenance requirement, which is usually between 25 and 40 percent, your firm will issue a margin call.

A margin call means you must immediately sell stock or deposit money into your account, or your firm will liquidate your stock for you.

Probably the most common form of stock liquidation is one you can initiate yourself.

However, even in Chapter 11 bankruptcy, most stocks end up worthless.

Administration can even reduce debts so that they don’t need to be paid for in full, if creditor negotiations are successful.

Corporate stock in a liquidation bankruptcy is ultimately worthless, since it represents ownership in a company with no assets that no longer functions as a going concern.

A Chapter 11 bankruptcy, as opposed to a Chapter 7 bankruptcy, does not always result in the liquidation of stock, since the company ultimately emerges from bankruptcy after reorganizing its debt.

All shareholders are entitled to the buyout price, although in some cases an investor must physically submit the stock shares to receive payment.

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At the conclusion of the buyout process, the target company's stock is delisted.

There has been much in the news recently about companies going into Administration, but what does this mean and how does it help the troubled company?