Grubb & Ellis and 16 affiliated Debtors filed for Chapter 11 protection...

Washington Mutual (WMI) announced that the U.S. Bankruptcy Court will enter an order confirming the Company's Seventh Amended Joint Plan of Affiliated Debtors pursuant to Chapter 11 of the United States Bankruptcy Code (as has been modified).

Great Atlantic & Pacific Tea Company filed with the U.S. Bankruptcy Court a First Amended Joint Plan of Reorganization and Exhibits to the Plan Supplement.

Energy Conversion Devices (ECD) and two affiliated Debtors filed for Chapter 11 protection...

Majestic Capital filed with the U.S. Bankruptcy Court a First Amended Chapter 11 Plan and related Disclosure Statement.

LSP Energy Limited Partnership and three affiliated Debtors filed for Chapter 11 protection...

The U.S. Bankruptcy Court entered an order approving William Lyon Homes’ Disclosure Statement and concurrently confirming its Joint Prepackaged Plan.

CDEX filed for Chapter 11 protection...

Eastman Kodak announced that, as a result of its ongoing strategic review process and commitment to drive sustainable profitability through its most valuable business lines, it plans to phase out its dedicated capture devices business--comprising digital cameras, pocket video cameras and digital picture frames--in the first half of 2012.

Trailer Bridge filed with the U.S. Bankruptcy Court a First Amended Chapter 11 Plan of Reorganization and related Disclosure Statement.

The recent unfortunate accident involving the Costa Concordia cruise ship, which is owned by a subsidiary of Carnival Corp., raises an important investing question: Should you bail out of a stock if the company is affected by a serious negative event? Unless the event could be part of a series or trend, the answer is usually “no,” for two reasons.

The argument in favor of buying Kodak stock goes something like this: Now that Kodak has filed for bankruptcy, its stock trades for about 30 cents; but since it traded for more than $30 just a few years ago, doesn’t that mean it has to be cheap? Unfortunately, there are two major fallacies with this argument.

One of the things we like to see in a potential turnaround stock is a strong brand name. That will often provide the foundation on which the company can build its turnaround. However, the recent Chapter 11 filing by Hostess Brands and Eastman Kodak are reminders that well known brand names alone may not be enough to save a company. In both of these cases the brand names are widely recognized, but the products with which they are associated no longer represent strong business franchises.

I never recommend getting out of the stock market entirely--or even making major changes to your allocation to stocks. The stock market is so unpredictable that if you bail out, the risk is very high that you will miss a significant upturn. Moreover, even if you make the right call to get out of the market, you then have to muster the courage to get back in. 

There are certainly good opportunities in foreign turnarounds, but also very significant risks as well. The market inefficiencies that provide unusually high return potential for turnarounds here in the U.S. are probably even greater in foreign markets. However, there may be special, local features that affect foreign companies that we may not understand when we view them from afar. 

The structural factors relating to bankruptcy securities can be both legal and psychological. As an example of a legal factor, many institutional investors (such as insurance companies or mutual funds) are not allowed, either by law or by their charter, to hold bonds that have defaulted and no longer pay interest.