The way I understand it, in bankruptcy they will issue additional shares further diluting your holding. The reverse split maybe as much a 1,000 to 1, that is your share will be worth 1/1,000 of what it was. But, it’s not certain the bankruptcy judge will even allow that. He might wipe out all unsecured creditors, meaning all stockholders pre-bankruptcy get nothing...that’s my understanding.
Also, stockholders were not unsecured creditors. Unsecured creditors have a contractual claim on assets (though not the highest contractual claim.)Stock holders are considered equity.
Typical Priority of Claims Before OBAMA.
1. Secured Creditors
2. Unsecured Creditors
3. Preferred Equity
4. Common Equity.
New Priority
1. Political friends and associates
2. Secured creditors
3. Unsecured creditors
4. Preferred Equity
5. Common Equity.