When a bankrupt company is acquired, are shares converted?

What happens to me as a former minor shareholder of 23andMe shares? Do they get converted to REGN shares, forced to cash, or something else per the terms of the acquisition?

Regeneron is acquiring certain assets of 23andMe as per the paragraph below from the announcement. Your shares will not be converted to Regenoron shares.

Under the terms of the agreement, Regeneron will acquire substantially all of the assets of the Company, including the Personal Genome Service (PGS), Total Health and Research Services business lines, for a purchase price of $256 million.

The funds from the sale will most probably be used to pay 23andMe’s creditors and claimants first though it is upto the bankruptcy court to decide who among these exactly get paid and by how much. If anything is left, this might be distributed as special dividends to 23andMe’s shareholders.

First looking at Chapter 11 in general.

This is from FINRA: What a Corporate Bankruptcy Means for Shareholders

Trading After Bankruptcy: A High-Risk Gamble

Companies that file for Chapter 11 bankruptcy protection often fail to meet the listing requirements of the major exchanges—and are subsequently delisted. Still, they may continue to trade over-the-counter. Bankrupt companies typically have the letter "Q" appended to the end of their stock symbols to denote the bankruptcy.

Investors may also operate under the false assumption that once a company has emerged from bankruptcy, their old stocks will regain value. In fact, the opposite is most often true: most reorganization plans, once put into effect, cancel existing shares. Only "new" shares—those issued by the reorganized company under a new trading symbol—have value.

Investors should understand that buying common stock of companies in Chapter 11 bankruptcy is extremely risky and can lead to financial loss.

So expect that your shares are worthless. The reason for this is that after all their debts are settled there is nothing else to be divided by the owners of common stock.

Now as to what happens to the shareholders of a non-bankrupt company when it is purchased. The can give you cash, they can give you shares of the acquiring company. They can give you cash and shares if they don't want to distribute fractional shares.

Sometimes the companies merge and everybody ends up with shares in a new company. Again it could be cash, shares, or cash and shares.

Usually the press releases will give you the basic details regarding the different shares involved. The press releases for this deal never mention current shareholders. They don't say that shares will be exchanged. They don't say they will get $x a share in cash.

I wouldn't expect to receive anything when this is over.

What happens to shares of a bankrupt company depends on the terms of the bankruptcy proceedings.

If the company restructures and it results in a new entity, shareholders may exchange their shares for shares in the acquiring or newly formed company.

If the company emerges from bankruptcy with no restructuring, existing shares will remain as is.

If the company is acquired, shares could be converted or shareholders could receive cash.

If the company is in liquidation bankruptcy, shareholders will most likely to get nothing.

Sources of this information will be SEC filing, communication from the company, and your broker.