Investing in stocks of companies that went bankrupt, seriously? Seriously! What at first sounds like a recipe for disaster, indeed can be a lucrative endeavor. A bankrupt company is not the same as the ceasing of operations. Indeed, often it is even the case that companies go into bankruptcy restructuring while everyday operations continue. This area can be a great treasure trove to fish for potential multi-baggers where others don’t bother due to negative associations. A premier on Financial Engineering: My Premium PLUS members receive my latest stock idea – a pick that recently emerged from bankruptcy – with the potential to multi-bag.

Summary and key takeaways from today’s Weekly
– Searching for interesting stock ideas where others don’t bother: remerging bankruptcy cases.
– While this category is clearly not a no-brainer, requiring extensive due diligence, it can be very lucrative due to leaner balance sheets and little public attention.
– For my Premium PLUS members, I have dug out such an idea – potential: multi-bagger.

For quite some time, I have been on the hunt for a case where the company goes through bankruptcy, like the US Chapter 11. While “bankruptcy“, especially for a European mind, sounds more like the end of a story, in most cases it is a reorganization process to start fresh anew.

Yes, indeed!

Companies that go into bankruptcy or submit to a bankruptcy restructuring usually have one thing in common: too much debt. This does not always have to be the case as not being profitable and burning cash through the reserves, too, can be the end of the day when they cannot get new financing.

But I said restructuring and that daily operations often continue.

This is what I was looking for. Over-levered companies that simply cannot afford their debt anymore. Too much overall debt, but als too high cost of debt eating into profits (if there are any).

Typically, legacy equity holders get dry-shaved, while creditors receive some form of a restructuring of the outstanding debt (e.g. extended maturity, securities, higher interest) plus a big chunk of newly issued equity, a debt-for-equity swap.

Buying into the bankruptcy is likely a safe loss.

But what does speak against looking at a company that just emerged from such a restructuring, now either entirely free of debt or at least with much less of it?

The average total return of my best stock ideas is ahead again of the S&P500 and the Dow Jones. With my risks-first approach (paired with high upside), I am able to find stocks with great returns.

Join me and my members on our journey to beat the markets!

^{both as per 17 September 2025 market close – since August 2022}

Out of bankruptcy into multi-bagger status?

Coming straight to the point, this approach has no guarantees and like all other of my ideas requires extensive due diligence and analysis.

Sorry, no free lunch here!

But the good news is, bankruptcies are often negatively associated, meaning that interest usually is rather low in the early phase after a restructuring was completed.

In case, the company comes back to the markets.

To name a few prominent cases where a bankruptcy was indeed the end of the day, Lehman Brothers, WorldCom, Blockbuster, Toys “R” Us, J.C. Penney, Sears, PanAm Airlines or Bed Bath and Beyond did not come back to the stock market in a similar form to their predecessor entities.

Investing before practically would have led to a total loss, with no second chance given.

But here or there are cases where companies go into Chapter 11, restructure their capital (primarily to the disadvantage of old equity holders), and a successor entity comes back. It can even have the same name, but new stock gets issued. Old equity holders in most cases only get a fraction of the new equity, if at all. Creditors / debt holders are senior to shareholders, hence they usually take control of the company.

As legacy shareholders get frustrated and sell their stock, and at the same time publicity is either negative or not available at all, at times an investor who loves to turn over rock after rock, can find a potential multi-bagger.

If you find decades- or even centuries-old companies with famous names and actually a long history as a publicly listed company, but a stock chart that only reaches back a few years, there’s a high chance the company started all over again after a bankruptcy (assuming the data provider is not toast).

Here are examples of companies that went bankrupt, and re-listed after the restructuring process.

Does anyone remember the mass-bankruptcies in the coal sector a good decade ago? High debt, the phasing-out of coal, cutting off debt financing, ESG investing, and low commodity prices made this step necessary.

For example, Arch Resources, formerly Arch Coal, filed for Chapter 11 bankruptcy in 2016 (see here) and merged with CONSOL Energy in 2025 to form Core Natural Resources (ISIN: US2189371006, Ticker: CNR), today a producer of thermal and metallurgical coal.

As a second case, Alpha Metallurgical Resources (ISIN: US0207641061, Ticker: AMR), previously Alpha Natural Resources, restructured post-2015 bankruptcy by merging with Contura Energy’s metallurgical assets, focusing on steel-making coal (see here, and here).

Although the predecessors have rich histories, the max stock charts look the following:

These are just two examples from this sector.

But above you can see that these stocks, bought post-bankruptcy, would have resulted in stellar gains until the top, and still solidly positive results until today.

Another example, offshore drillers.

Valaris (ISIN: BMG9460G1015, Ticker: VAL), formed from the 2019 Ensco–Rowan merger, went into Chapter 11 bankruptcy in 2020 (see here), and came back with a lean balance sheet. 

Seadrill (ISIN: BMG7997W1029, Ticker: SDRL), another offshore driller with deepwater rigs, reemerged from its Chapter 11 in February 2022 (see here) following a December 2021 filing to shed debt. 

Not as great results as in the first example, but these are different industries and of course circumstances are not the same either.

Next, let’s take airlines.

Delta Air Lines (ISIN: US2473617023, Ticker DAL), originally founded in 1926, filed for Chapter 11 in September 2005, emerged in April 2007 (see here), and later merged with Northwest Airlines in 2008 (see here).

American Airlines (ISIN: US02376R1023, Ticker: AAL), tracing back to 1925, entered Chapter 11 in November 2011, and reemerged in December 2013 (see here) after merging with US Airways.

While Delta did relatively well, especially for an airline, the American chart is a bit tricky. The max chart includes the predecessor, while the restructuring took place later. Looking from about the 2011–2013 period, AAL stock would be modestly positive. But with both one could have fetched multi-baggers.

Last sector, autos. While Chrysler was acquired by Fiat in 2014 (today both are inside of Stellantis (ISIN: NL00150001Q9, Ticker: STLAM) ), the more famous case of General Motors (ISIN: US37045V1008, Ticker: GM) can be used as an example.

General Motors, originally founded in 1908 as a holding company for Buick and other brands that were acquired later like Oldsmobile or Cadillac, filed for Chapter 11 bankruptcy in June 2009 (see here) during the financial crisis, but emerged a month later in July 2009, after shedding tons of debt.

Unlike the previous cases, GM has paid solid dividends in between, at least until 2020, which should be added to the total performance.

Let’s maybe take a less cyclical industry.

Charter Communications (ISIN: US16119P1084, Ticker: CHTR) was founded in 1993 to build a regional provider through acquisitions of small cable systems in a deregulated environment, later merged with Time Warner Cable in 2016, but in between filed for bankruptcy in 2009 (see here) due to high debt and cable competition. It re-emerged later that year and re-listed.

The stock is strongly up since then, however, it seems to be losing steam again with 95 bn. USD in net debt. Maybe a second restructuring will be needed, soon?

What about Hertz Global (ISIN: US42806J7000, Ticker: HTZ)?

Hertz, a long-time market leader in vehicle rental and leasing, has a history dating back to 1918. Incorporated in 1976, the company has been a prominent player in the industry. However, the onset of COVID-19 brought global travel to a halt, leading to a rapid decline in Hertz’s business.

As a result, the company filed for bankruptcy nearly overnight, becoming one of the largest Chapter 11 filings in history (see here).

However, the performance since re-listing is not good, proving that not every reemergence from a bankruptcy restructuring is a no-brainer for stock investors.

The list could go on and on. But I think the core message is clear.

Post-bankruptcy cases can be interesting and even lucrative, given the reorganization sheds away plenty of debt. On top, the business must have relevance to continue operating.

This is exactly what led me to my latest stock idea.

Conclusion

Searching for interesting stock ideas where others don’t bother: remerging bankruptcy cases.

While this category is clearly not a no-brainer, requiring extensive due diligence, it can be very lucrative due to leaner balance sheets and little public attention.

For my Premium PLUS members, I have dug out such an idea – potential: multi-bagger.

By becoming a Premium or Premium PLUS Member, you get instant access to all my already published research reports as well as several updates.

Likewise, you qualify for eight, respectively four more exclusive reports with my best investment ideas plus updates on the featured businesses over the next twelve months.