via CableCarCapital.com - What Happens When You Short A Stock To Zero?

Cable Car Capital discusses the formalities involved in extinguishing equity interest in a company going through bankruptcy. Even if the shares were delisted, they are still somehow listed at the DTCC corporation. So anyone who had shorted the shares may still be liable for margin interest even if the company disappears.

Golden Band is still a going concern, but no longer an issuing reporter. Insiders had shorted shares in distributive sales and non-distributive sales in large numbers. So extiguishing equity interest is a matter of formally closing those short sales once and for all, that the DTCC does its housecleaning. The 'creditors' were paid in full, and the company continues as a going concern, so why does the subcontractor get equity issued to them when they were made whole?

There is also the problem of company ownership, that in order to be considered a beneficial owner in the company a shareholder aught to have voted in favour of the business plan during the proxy vote almost a year ago. What happened to that?

Then there's the fact that almost 70% of the public float of the shares were held short, meaning you bought the shares but in fact were given an IOU and the money went into something else.

Just a matter of how long this will all take before it's resolved, just that the shareholders are woefully under informed, or perhaps completely wiped out.

http://www.cablecarcapital.com/what-happens-when-you-short-a-stock-to-zero/

-F6