When companies go bankrupt, they quickly start talking about their future. But while a small number of bankrupt companies have proven to be good investments, you need to understand that in the vast majority of cases, you won't be part of that future -- at least not with the shares you own now.

Monday's bankruptcy filing by General Motors (OTC: GMGMQ.PK) is just the latest example of the confusion that results among shareholders of bankrupt companies. Already, everyone has started talking about how the U.S. government will get a 60% equity stake in the post-bankruptcy GM, with the Canadian government, current bondholders, and the UAW splitting the remainder.

Clearly, all this talk about future GM shares has given many investors exactly the wrong idea. GM shares that are currently trading -- the ones that will be worthless in a matter of months -- actually rose for a while during Monday's trading.

Not the first time
Such confusion has come up many times before. Many companies have emerged from bankruptcy protection and issued new shares, having left investors in old shares with total losses. Below is a partial list of some of those companies, along with how their new shares have performed:

Company

New Shares First Traded

Total Return Since Offering

Conseco (NYSE:CNO)

Sept. 11, 2003

(88%)

Delta Air Lines (NYSE:DAL)

May 3, 2007

(69%)

UAL Corp. (NASDAQ:UAUA)

Feb. 6, 2006

(84%)

Source: Yahoo! Finance.

If you didn't look closely, you might have incorrectly assumed that the new shares that traded after bankruptcy were somehow related to those that traded for pennies before and during proceedings. But they weren't -- and often, the emerging company didn't manage to do much better even after receiving all the benefits that bankruptcy can offer.

Successful bankruptcies
However, there are some instances in which companies that file for bankruptcy don't leave current shareholders penniless. PG&E (NYSE:PCG), for instance, filed for bankruptcy in early 2001. But after three years of restructuring, shareholders who held on throughout the process saw their investment triple in value. Similarly, USG (NYSE:USG) emerged from five years of bankruptcy protection in June 2006, with shares having risen from $4 during the month the company filed bankruptcy to $72.

Most of the time, bankruptcies that end up creating profits for investors involve situations in which the company can continue operating during bankruptcy proceedings. By negotiating more favorable deals with creditors and other interested parties, companies can come out of bankruptcy with a new lease on life.

Profiting from liquidation
On other occasions, a company may discover that even after going through bankruptcy, there's no reason to expect the business to be profitable going forward. In such cases, a company may decide to liquidate. Yet sometimes, even dying companies prove to be smart investments. If companies have enough assets to pay off creditors with something left over, then shareholders can reap the benefits.

Footstar, for instance, filed for bankruptcy in 2004, and by 2006, it had come up with a plan that called for the company to continue an agreement with Sears Holdings' (NASDAQ:SHLD) K-Mart division and then liquidate its assets and make distributions to shareholders. Shares traded around $4.50 in early 2006, but since then, the company has paid $9 in dividends. Moreover, it still expects to make a final liquidating distribution.

Dispelling any illusions
Nevertheless, no one should deceive themselves into thinking that GM shareholders will get anything out of its bankruptcy proceedings. In its filing, GM listed assets worth $82 billion against debts of almost $173 billion.

In all likelihood, GM shares will once again trade on stock exchanges after the company completes the bankruptcy process. They may even prove to be good investments. But those shares aren't the ones that are trading right now -- and anyone who thinks otherwise will get a nasty surprise when the bankruptcy court eventually declares them to be worthless.

For more on making smart moves with your investments, read about:

Learn more about smart stock investing from Fool co-founders Tom and David Gardner in their Motley Fool Stock Advisor newsletter. Market-beating recommendations, in-depth analysis, and much more are yours free with a 30-day trial.

Fool contributor Dan Caplinger isn't going anywhere near bankrupt companies. He doesn't own shares of the companies mentioned in this article. Sears Holdings and USG are Motley Fool Inside Value selections. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy prevents moral bankruptcy.