Tag Archives: securities received pursuant to Section 1145(a) of the Bankruptcy Code

Securities Received Pursuant to Section 1145(a) of the Bankruptcy Code

When OTC Markets and OTC Bulletin Board public companies file for Chapter 11 bankruptcy protection, shares are often awarded to creditors as part of the company’s reorganization, and in order to facilitate the settlement of claims against the company.

Are the shares received pursuant to Section 1145(a) of the Bankruptcy Code considered the same as Rule 144 restricted stock?

No. Securities received pursuant to a Bankruptcy Code proceeding under Section 1145(a) of the Bankruptcy Code are technically received in a “public offering” under Section 1145(c) of the Code.  For this reason, the shares, which are awarded by Court Order, are considered free trading, as if they were registered.

This is essentially the same rationale which allows shares received in a 3(a)(10) settlement under Court Order to be free trading, and eligible for sale with a securities lawyer’s opinion letter.

Securities Attorney Drafting Legal Opinion Letters for Stock

Shareholders receiving stock under Section 1145(a) of the Bankruptcy Code or creditors settling claims under Section 3(a)(10) can contact securities lawyer Matt Stout for the legal opinion necessary to deposit and sell their shares at (410) 429-7076 or mstout@otclawyers.com.