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If a company files for bankruptcy, how come its stock still trades ?

E.g. On June 17, Wirecard was valued at more than $14 billion. Eight days later, it filed for the German equivalent of bankruptcy. Its stock is still trading. Why is it not suspended as is the case for Finablr ( fraud probe ). What is the usual practice ?

Can we say that Wirecard defaulted ? i.e if they filed for bankruptcy earlier.

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    $\begingroup$ It is possible but unlikely that Wirecard is actually worth something after it pays its debts. Its share price was EUR 100.50 in mid June and now EUR 0.59, so the market judges that it is very unlikely. $\endgroup$
    – Henry
    Commented Oct 15, 2020 at 9:57
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    $\begingroup$ I’m not sure this question can get easily answered. As Henry’s comment notes, the equity can still have value after a bankruptcy, so it theoretically can trade. However, it might be possible that the company’s finances are so disrupted (by fraud), that there is little chance of legitimate trading, and so the shares get suspended by the exchange/regulators. The criteria for this decision will change for every jurisdiction, and it is unlikely that anyone here has the capacity to survey these rules. This is an economics board, not a stock trading Q&A site. $\endgroup$
    – Brian Romanchuk
    Commented Oct 15, 2020 at 12:20
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    $\begingroup$ The title also has nothing to do with the question. Bankruptcy = going to a court to get protection from demands for payment. Default = Missing a contractual debt payment. The difference between them has nothing to do with stock market listings. $\endgroup$
    – Brian Romanchuk
    Commented Oct 15, 2020 at 12:32

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Declaring bankruptcy is a step taken by companies to get protection from creditors. (They cannot seize collateral unilaterally, etc.) The company can still operate, within the legal framework, and with the obvious limitation that nobody wants to be owed money by the firm. Although equity often ends up worthless after all creditors have their claims settled, this is not always the case. As such, equity shares may not be worthless.

The question of the value of the equity is distinct from being listed on an exchange. This question cannot be easily answered since each exchange has its own requirements to be listed.

For example, the NYSE criteria are here: link to standards.

Note the phrasing: “The NYSE reserves the right...” to delist under various criteria. As such, there are no hard rules on what must happen.

For each company of interest, one would need to go to the exchange(s) where the shares are traded to see the rules.

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