I'm not sure if I can defend it, but it actually happens quite frequently to start-ups that burn through investment monies before they become profitable. Essentially a group of people invest money...we'll say A-D in this case.. At some time after investment, company X is still not profitable and have spent all the invested capital and none of the investors want to put new money in. If no one is interested in the business, it just dies. All the workers get fired, any debts get settled in court, and all the investors loose 100% of their investment. In many cases however, one or more of the investors will say, "I'll buy the company for Y dollars, assume the debts, hire some of the staff, ect.". Sometimes Y is very low, so all the remaining investors get nearly completely wiped out, all the stock is worthless. I think of it like a poker game where everyone else folded. Surprisingly the staff at the new company isn't typically all that upset about loosing their stock options. They've known for a while their company wasn't making any money and the options were worthless anyway.