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Overseas Shipholding Group Inc. (NYSE: OSG) has just fallen on its sword. We recently named the next penny stocks and this was one of the companies we warned could easily fall into that realm. After closing at $1.13 on Tuesday, this is now reality as shares are down more than 60% and under $0.50 so far this morning.

The culprit: Overseas Shipholding Group has filed for bankruptcy.

We did note in our future penny stock analysis that the company has warned of this possibility in recent weeks. Things are so bad that this might be the only way out. Still, this is not looking good for the common stockholders as they usually get wiped out entirely or almost entirely in the bankruptcy deals.

The press release noted:

The company intends to use the Chapter 11 process to significantly reduce its debt profile, reorganize other financial obligations and create a strong financial foundation for the Company’s future. Certain subsidiaries, including those that manage the Company’s facilities in Manila, Singapore, Greece, London and Newcastle, have not filed for Chapter 11 reorganization. A complete list of the OSG entities which filed, and those which did not file, Chapter 11 petitions, is available at www.kccllc.net/osg. OSG intends to work with its constituencies to emerge from bankruptcy as quickly as possible while maintaining the company’s market position, business model and strategy.

Want to know the other companies at risk of becoming the next big penny stocks? That list is here.

JON C. OGG