By Alexander Gladstone

Spirit Airlines entered chapter 11 Monday after reaching a restructuring deal with bondholders. Here's what that means for owners of Spirit shares.

What will shareholders receive?

They are set to be wiped out. The plan assigns no value to existing shares as part of the restructuring and the stock is set to be canceled.

That wouldn't be uncommon. Stockholders in companies that go bankrupt typically lose most or all of their investment. While there are occasionally bankruptcies in which equity investors emerge with a partial or full recovery, those situations are highly unusual.

What happens to Spirit stock now?

The budget carrier expects its stock will be delisted from the New York Stock Exchange in the near term. Until the shares are canceled, they will likely trade in the over-the-counter marketplace through the chapter 11 process, Spirit said.

What will creditors get?

Spirit intends to use bankruptcy to cut debt by about $800 million. The restructuring deal will hand control of the company to its bondholders.

Meanwhile, vendors, aircraft lessors, and holders of secured aircraft debt will keep being paid in the ordinary course of business and won't be impaired.

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November 18, 2024 10:51 ET (15:51 GMT)

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