Uni-Pixel Inc (NASDAQ: UNXL)
Uni-Pixel has been an interesting stock to watch over the past few days. Recently, the company announced that it had filed for bankruptcy, and while the stock did fall on the day of the announcement, we've seen some positive news since. In fact, UNXL is trading in the green again today. So, why is it that we're seeing positive movement following what can be perceived as incredibly bad news? Today, I'll do my best to answer that question.
UNXL Gains After Bankruptcy
As mentioned above, Uni-Pixel recently announced that it filed chapter 11 bankruptcy. Although the stock didn't have the best of days in the market on the day of the announcement, we've seen more green than red since the announcement. So, why is it that we're seeing positive movement after what many would consider to be negative news? Well, it's all in the circumstances...
First and foremost, there is a big difference between chapter 7 bankruptcy and chapter 11 bankruptcy. When UNXL filed for bankruptcy, the company filed for chapter 11. This type of bankruptcy is focused on restructuring debts. The idea here is that through restructuring and with the assistance of a financial court, the company will be able to meet its obligations in time. While it won't be easy, there is an opportunity for the company to restructure, get its finances in order, and come out on the other side as a financially stable company.
Chapter 7 bankruptcy would have been a whole different animal. If UNXL were to file chapter 7 bankruptcy, it would essentially have to liquidate all assets. Any money from the liquidation would go to paying lenders. Once lenders were paid off, shareholders would get the pennies left over. Thankfully, this isn't the route that Uni-Pixel took.
The Bankruptcy Is Actually A Saving Grace
The reality is that UNXL has been struggling. There's no doubt about it. To see the clear picture, all you need to do is look at their recent financial releases. As a result of these struggles, many were worried that the company wouldn't make it through. While bankruptcy is never a good thing, for UNXL investors, it's proving to be a silver lining to an otherwise dark cloud. Ultimately, the bankruptcy will give the company a second chance, a chance to make it over this hurdle and come out ahead on the other side.
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What We'll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on UNXL. In particular, we're interested in following the bankruptcy and excited to see what the company does with this second chance. Nonetheless, we'll continue to follow the news closely and bring the story to you as it breaks!
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