Orchard’s management has noticed high trading volume in Orchard’s Class A Common Stock and Series A Preferred Stock following its filing of Chapter 11 with the U.S. Bankruptcy Court on June 17, 2013. Stockholders of a company in Chapter 11 generally receive value only if all claims of the company’s secured and unsecured creditors are fully satisfied. In this case, Orchard’s management strongly believes that it is highly unlikely all such claims will be fully satisfied. Accordingly, it is expected that the Company’s equity holders will experience a complete loss of their investment as a result of Orchard’s Chapter 11 bankruptcy proceedings, as previously disclosed in the Company’s Form 8-K filed on June 17, 2013 and in its Form 10-K/A for the fiscal year ended February 2, 2013.
Some had commented on the strange fact that the preferred shares had plunged while the common held steady. This made little sense as the preferred is higher up in the capital structure. The company made clear today that it is unlikely that even the preferred will see any recovery. Both the common and the preferred dropped 60% in the wake of the announcement. Separately, the company announced that its motions to continue operating had been granted by the court. More details about the bankruptcy case can be found at www.OrchardRestructuring.com.
Disclosure: The author owns a single share of Orchard preferred.
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Great site, keep up the good work on these spinoffs 🙂
This one seemed to have fooled many value investors. I read a bunch of analysis that said Orchard was going to be a great long term play from various sources.