When Does a Q Get Removed From a Stock Symbol?

"Q" prevents the blurring of a bankrupt corporation's old and new stock.

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The letter “Q” added to the end of a stock symbol is not a good sign for investors; “Q” means the company is in the midst of bankruptcy proceedings. The SEC warns investors to steer clear of “Q” stock, unless you’ve carefully reviewed the proposed bankruptcy reorganization plan and it looks like the company will come out of the financial trouble on top. In many cases, however, the company’s old stock -- labeled with the ominous “Q” indicator -- is dissolved after the proceedings.

Corporate Bankruptcy Basics

Corporations have the option of filing under two separate bankruptcy chapters: Chapter 7 and Chapter 11. Much like personal bankruptcy, a Chapter 7 filing dissolves the corporation, selling off its assets to pay creditors. Chapter 11 is more like a personal Chapter 13 filing, where the corporation remains in business but is restructured and monitored under the bankruptcy court. This enables the business to pay off creditors all the while attempting to regain profits.

Chapter 7 Effects on Stock

If the corporation’s stock is liquidated in a Chapter 7 filing, there is never a “Q” assigned to the ticker symbol. Rather the stock is liquidated and secured creditors are paid outstanding monies first, followed by unsecured creditors, bondholders and preferred shareholders. Common stockholders are paid last, and in most cases, there will not be any funds left to pay back outstanding shares. Consequently, the investor is oftentimes left holding the bag on his investment.

Chapter 11 “Q” Stock

Corporations filing for reorganization under Chapter 11 bankruptcies might retain their existing stock, but are generally "delisted" from major exchanges and are forced to trade on the secondary markets. A “Q” is added to the end of the corporation’s stock ticker symbol to indicate the company is in bankruptcy proceedings. Current stockholders might either attempt to sell their shares in the secondary markets, or ride the storm out, hoping the company and its related stock regain profitability.

Old Stock vs. New Stock

Oftentimes during bankruptcy’s reorganization, the company retains its old common stock -- the “Q” stock -- on the secondary market and issues new stock shares under the reorganized business. Each stock will have different ticker symbols, and the new stock issue will not have a “Q.” Investors holding the old common stock still run the risk of losing their money despite a successful reorganization, because new investors will most likely purchase the stock offered by the reorganized company rather than the stock issued prior to the corporation’s bankruptcy.

“Q” Always Stays

The “Q” is never actually removed from the stock in question’s ticker symbol because it differentiates the pre-bankruptcy stock from the post-bankruptcy stock. This letter remains an important part of the stock’s ticker symbol; otherwise, potential investors would not be aware that they are purchasing stock involved in a bankruptcy that might become worthless on the markets once new stock is issued under the reorganized corporation.