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Orchard Supply says, ‘Don’t Buy Our Stock’

On Wednesday, shares of Orchard Supply Hardware (NASDAQ:OSH and OTCQB:OSHSQ) were down 40 percent in pre-market trading after the company issued the following release:

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.

Interestingly, the company made it a point to say that it has already disclosed this information. In other words, before you invest, it might be a good idea to read the actual filings. There aren’t many sure-things in the investing space but in this, case it’s clear: Don’t put money to work in Orchard Supply Hardware hoping that you’ll capture a premium in the buyout.

Disclosure: At the time of this writing, the author had no position in the above name stock.

[stock-tools exchange="NASDAQ" symbol="OSH" image_height="230" image_width="350"]

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