GT Advanced (GTAT) Has a Few More Days to Trade Like a Real Stock Before Moving to the Abyss

With GT Advanced Technologies (NASDAQ: GTAT) filing for Chapter 11 bankruptcy protection Monday, NASDAQ rules govern how long the stock can remain trading on the exchange before it gets shuffled down to the lowly pink sheets or OTCBB.

According to NASDAQ rules: When a company announces that it has filed for bankruptcy protection, or that filing is imminent, NASDAQ will impose a news dissemination halt. Generally, trading will be allowed to resume 30 minutes following release of the news. Shortly following the resumption of trading, NASDAQ will issue a delisting letter to the company, which will indicate that the company will be delisted in nine calendar days from the date of the determination letter unless it requests a hearing within seven calendar days. The company is required to publicly disclose that it has received this letter as soon as possible, but in no event later than four business days from receipt of the letter. If the company requests a hearing, trading will usually continue until the Panel issues its determination. Hearings for bankrupt companies are generally scheduled within 25-30 days of the date of NASDAQ's delisting letter.

So assuming NASDAQ fired off the letter yesterday and assuming GT Advanced doesn't appeal the delisting, which will likely be the case, shares could be delisted as soon as October 14th.

The stock will likely start trading under the ticker symbol "GTATQ" (with the Q indicating bankruptcy) following the delisting.

After collapsing over 90% Monday on the bankruptcy filing, shares of GTAT are rebounding 69% Tuesday as speculators bet there may be some equity left after all is said and done in court - as was the case with airline AMR in its bankruptcy and General Growth Properties in its case. However, the truth is most equity holders in a bankruptcy cases get wiped out. Raymond James GTAT analyst Pavel Molchanov said they expect the equity is almost certainly worthless.

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