Sirius XM Bankruptcy Fears, 5 Cents a Share

Before the company can get the word out, the media has run with the Sirius XM Radio Inc.(NASDAQ:SIRI) Bankruptcy story, the result is 5 Cents a share.

But when its the New York Times that puts out the story, you can't question the credibility and before the company can say its peace, the selloff had already started.  Today SIRI shares are down 50% and trading between 5 and 6 Cents USD, hello Penny Stock. 

Here is the actual story from the NY Times - Sirius XM Prepares for Possible Bankruptcy.  Despite the title of the article, all it took was one sentence to send investors bailing: "Sirius XM, the satellite radio company, has problems with much bigger price tags. It has hired advisers to prepare for a possible bankruptcy filing, people involved in the process said."

According to the NY Times, Sirius is drafting Chapter 11 bankruptcy paperwork with a restructuring attorney and could file for reorganization in a matter of days.  This would be the best option for the company, reorganization and come out with a cleaner balance sheet and new directors. Under bankruptcy court protection, Sirius would be able to negotiate new programming contracts and get out of unattractive deals entirely.  However for the shareholder, the best you may get is today's offer for a nickel.