DISTRESSED DAILY: Which Part of ‘You Get Nothing’ Isn’t Clear?

The warning to shareholders of newly bankrupt Ascena Retail Group Inc. could hardly have been more direct. There it is, in black-and-white, on page 5 of the court declaration filed by Ascena’s most senior official just hours into the case:

“Existing common equity in Ascena will be canceled.” Full stop. Creditors will take ownership of the retail chain, which Ascena also made plain.

So how did stock investors respond? By bidding up the shares just shy of 120%, on off-the-charts volume.

It was a similar story for bankrupt Global Eagle Entertainment Inc. The airborne Wi-Fi service jumped more than...