Genco Bankruptcy Ruling Provides Insight Into Value Of Eagle Bulk Shipping Shares
- Based on a recent ruling in a bankruptcy case for a comparable dry bulk shipping company, Eagle Bulk’s shareholders are at risk of substantial losses.
- Eagle is in default of its credit facility and will likely file for Chapter 11 bankruptcy protection in the next few weeks in order to restructure its balance sheet.
- The recent ruling in the Genco Shipping bankruptcy provides a framework to analyze the potential recovery for Eagle shareholders.
- The pending restructuring provides investors with an asymmetric opportunity to profit by shorting the stock or entering into option transactions that benefit from declines in the stock price.
- Based on the Genco precedent, the shares are likely worthless, but could receive up to $2.00 per share as a gift.