A mass selloff would depress the stock price, which in turn could lead to more people dumping the stock, creating a downward spiral. Not only would this hurt the company&#x27;s investors, it would seriously impact their ability to raise capital in the future.<p>(Though that&#x27;s probably true anyway if the banks decide to call the loan. By doing so they&#x27;re basically saying they don&#x27;t believe the company can repay its debts, and other potential lenders would either stay away or demand more onerous terms.)<p>Note I said &quot;could&quot; -- the actual effects depend on how much stock is being pledged and how quickly banks would try to dump it. Regardless, it would be huge negative news and affect the stock price negatively. Look at how Apple&#x27;s stock got punished because iPhone sales have stopped growing.