Is it possible (and likely) that Northwest Airlines could cancel their current
stock such that the current stockholders lose everything and NWA can
then create a new stock when they come out of bankruptcy with current
shareholders owning nothing?

Yes.  It can happen.  If Northwestern's liabilities outwigh their
assets, theowners value no value.  When you invest in securities, that
is the risk you bear.  The return on equities are much higher that
other safer instruments, but withit comes te risk that is could lose
alue, perhaps even all value.

The banruptcy court can cancel the equity ownership.  If the compnay
is to continue operations, it is likely that the current debt holders
may become the new shareholders of the firm.

People who do not understand this risk should not be investing in
securities. Such a risk can also be mitigated by diversifying your
portfolio.

See the recent United Airlines stock in the emergence from bankruptcy:
http://www.dailysouthtown.com/southtown/dsbiz/033bd1.htm

So, the answer to "could it happen?" is yes.

Best regards,

Omnivorous-GA

Thank you both - Ubiquity and Omnivorous for your response.  I was
considering buying NWA stock thinking they will come out of the
bankruptcy and the stock is sure to increase in value.   But if it is
likely their current stock would be  cancelled before they come out of
bankruptcy and a new stock replaces it, then it looks to me like it
may not be a good long term investment at this point.