It is theoretically possible for any business to go to zero.įool writer Mike King wrote many years ago about how a sizeable portion of businesses on the ASX faced financial uncertainty. Put simply, if there’s no money left after repaying creditors and everyone who is entitled to payment before investors, then shareholders will get nothing. After going through the process with creditors, the company can still go into liquidation. This can come in many forms, such as selling assets or selling the whole business. If there’s no plan to save the business, the administrator will try to find the best option to repay creditors. The company’s leadership investigates if a plan to save the company can be created. If there are creditors, an independent registered liquidator/administrator takes control of the company. ![]() Creditors usually get paid first, with secured creditors at the front of the queue.Ĭompanies don’t necessarily get wound up straight away. Shareholders are often at the bottom of the list of who will get money when businesses close. But ASX shares going broke can be particularly high profile. It’s true that businesses go broke all the time. What happens to a business that can’t operate anymore?īusinesses that go broke often have a large pile of debt that the company can no longer afford. An independent expert concluded that the equity of Virgin Australia had nil value. ![]() The shareholders of Virgin Australia didn’t get anything as the company entered administration as a casualty of the COVID-19 pandemic. There have been a few high-profile corporate downfalls in Australia over the years.ĪBC Learning was a childcare operator that was worth $2.6 billion but collapsed after taking on far too much debt through acquisitions. But could the buy now, pay later ASX share ever go to zero? The last 12 months show an 87% decline for the Zip share price. The Zip Co Ltd (ASX: Z1P) share price has certainly plummeted.
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