Buying stock in Kodak prior to their emerging from bankruptcy is absolutely, without a doubt, the worst thing one could possibly contemplate. To begin with, even purchasing 100% of the shares will not give you control. The company is in bankruptcy, and control is now formally in the hands of the court and effectively in the hands of the creditors. Shareholders are powerless in this situation.
Originally Posted by Darkroom317
Furthermore, the chance that shareholders will retain any value when the company emerges from bankruptcy is zero. For example, suppose you were to invest, let us say, $10,000,000 in kodak shares today and hold them until the company emerges from bankruptcy. When the company emerges from bankruptcy your shares will have a value of $0.00, that's zero, as in absolute zero, as in not worth even one penny.
This is not a good investment strategy.
It all comes down to how things work in a bankruptcy. Without going into much detail, in a bankruptcy there is a sort of prioritization that takes place for claims on company resources. Shareholders are last in line. This means that every class ahead of the shareholders must be made whole before the shareholders get anything. Since the company owes more money than the value of its assets, the current shareholders will be left out in the cold. If there is to be an operating company at the end of all this it will not be owned by the current shareholders.
The typical scenario is for the old shares to be cancelled, and new shares are to be issued to the current bond holders. Thus, the current shareholders get nothing, and the company will end up being owned by the current bond holders.