Here's What's Happening With Delcath Systems, Inc. (NASDAQ:DCTH)

If you're a day trader, chances are you've heard of (and likely bought and sold shares of) Delcath Systems, Inc. (NASDAQ:DCTH). The company drew a large amount of speculative volume after it spiked earlier in the year on the back of shareholders successfully voting down a reverse split. Since then, however, management has continued to push for said split and Delcath's share price has been something of a roller coaster, with the battle between management and shareholders (with the reverse split in the middle) making it tough to fall on one side of the fence or another from a long term bias perspective. DCTHThe situation right now is that a proxy initially filed with the SEC back in July has just been delayed, with Delcath pushing back the deadline to September 7. If by this date more votes in favor of the proxy have been cast than votes against it, Delcath will split (by what ratio, we don't yet know) and the company will amend its certificate of incorporation to allow for an extra raft of shares being available for issue.So what does this mean for shareholders and, just as importantly, is there any opportunity here for day traders or otherwise?If the reverse split goes ahead, Delcath will rise above one dollar and if it can stay above this level for a couple of weeks, it will regain compliance with NASDAQ. Management have repeatedly highlighted this compliance as being crucial to the company being able to raise money (quite rightly), which it needs to complete its lead oncology program and the ongoing trial associated with said program.A large number of shareholders don't want to reverse split, however, and the company is having to work incredibly hard to persuade a portion of those against to switch camps and join the for campaign. An announcement that came before the bell on Monday this week is an example of this – management detailed the fact that the company has negotiated an agreement for the extinguishment of some 2016 convertible notes from the holder of the majority of the notes and that, if fully executed, the agreement will extinguish approximately 90% of the remaining $12.6 million in debt related to the notes in question.Right off the bat, that seems like a positive move. There is a catch, however. In order for this transaction to take place, the reverse split needs to happen. Essentially, Delcath is dangling a carrot in front of shareholders, one that removes the potential for some future dilution, in order to get the reverse split approved.And what happens if it fails?This is where things get pretty interesting.First, we'll see the stock run dramatically as shorts run for cover. There's a large base of shorts expecting the stock to collapse on a reverse split and no doubt a substantial portion of these shorts are naked. If the split is voted down, we will see a quick squeeze that could easily outweigh the one that hit this stock earlier in the year.And then what happens?Well, the squeeze isn't going to support an inflated share price in and of itself, but it June kickstart buying in anticipation of what would likely be Delcath's only real option if it fails to pick up the votes it needs come September 7 – selling itself to a big name, one that can afford to get the clinical trial wrapped up.After all, Delcath's development program looks promising but management and capital structure are what is holding this one back.So that's it. Either a reverse split that will (through its listing status) help the company raise the capital it needs to complete its program alone but that will almost certainly cause a medium term decrease in valuation, or a short squeeze and a buyout.Let's see what happens.Check out our previous coverage of Delcath here. We will be updating our subscribers as soon as we know more. For the latest updates on DCTH, sign up below!Image courtesy of Eirik Refsdal via FlickrDisclosure: We have no position in DCTH and have not been compensated for this article.