Legal Lottery

If you like living dangerously, try investing in the shares of Internet access provider Northpoint Communications, now in Chapter 7. NorthPoint (Pink Sheets: NPNTQ) is suing Verizon Communications for backing out of a $1.3 billion commitment to buy it in 2000. The Baby Bell says it had the right to welsh because NorthPoint revised earlier financial reports. AT&T later bought all NorthPoint's assets, so the only thing left is its claim against Verizon. Court date is late July.

We seldom recommend stocks like this: You might find them hard to obtain. In most bankruptcies, equity holders get squat; in this one they'll likely come away with something if Verizon settles or loses in court, notes Jack J. Hersch of Cypress Management. The stock, now at 19 cents, could pay off 15 times that, he says. An alternative: You can buy the bonds, now at 24 cents on the dollar; they'd benefit if Verizon pays up, too.

--Scott Woolley