The

HealthSouth

(HRC) - Get Report

story is playing out like a cruel April Fool's joke.

Fretting over an April 1 debt payment that could tip HealthSouth into bankruptcy, Bank of America warned investors Monday to sell their shares in the scandal-plagued therapy chain before the stock becomes worthless. At least four other research houses issued similar downgrades last week, following

startling charges that HealthSouth has been inventing earnings almost as long as it has been reporting them to the public.

But helpless investors cannot heed Wall Street's warnings. The stock remains halted for the fourth straight session and could yet be delisted by the

New York Stock Exchange

before it trades again.

For now, the stock remains stuck at $3.91, the sum it last fetched before the company began crumbling less than a week ago. But HealthSouth bonds, which resumed trading on Friday, have plunged to half their pre-scandal price, and that points toward a likely restructuring.

According to the

Securities and Exchange Commission

-- which

charged the company with numerous securities violations Wednesday -- HealthSouth and its top executive intentionally overstated earnings by at least $1.4 billion in the past four years alone. In the meantime, CEO Richard M. Scrushy sold $25 million worth of HealthSouth stock -- or half his stake in the company -- just ahead of a questionable earnings warning that sent the shares plunging last August. The SEC now maintains that HealthSouth contrived the sudden earnings shortfall to bring Wall Street's expectations down to the company's realearnings potential, sparing uncomfortable officers from certifying false financial statements in the future.

Now, Wall Street doesn't know what to think. Analysts generally view both HealthSouth's earnings power and its very future as questionable at best.

In a downgrade issued Friday, Prudential analyst David Shove called the potential for bankruptcy "strong" and predicted the stock would go to zero.

"Because of the accounting fraud allegations, HealthSouth's credit sources are rapidly evaporating," Shove explained. "With its source of credit evaporated and debt due, we believe HealthSouth is facing a financial crunch."

After the fraud allegation erupted last week, HealthSouth's lenders halted the company's access to a $1.25 billion bank facility. The company is now scrambling to satisfy a $350million convertible debt payment that comes due April 1.

Shove, for one, doesn't know whether HealthSouth will have the cash to meet that obligation and skirt a bankruptcy filing.

"Since HealthSouth's financials are questionable, we do not know how much money the company has available," he said. "Although HealthSouth has assets, which may have value, we think the shareholders will have to wait years to receive any money as the creditor negotiations unfold."

In the meantime, Shove is predicting that HealthSouth will report no earnings this year or next, even under a best-case scenario. But like many of his peers, he is quick to point out that he has no trustworthy financial statements on which to base his calculations.

HealthSouth itself came forward Monday to warn investors that its financial statements are unreliable. However, it insisted that it's taking serious steps to restore the company's stability.

The board's "special investigative committee" has hired outside experts to evaluate the SEC's charges and explore the financial and legal strategies available to the company.

"HealthSouth is working very hard to stabilize this situation, and adding this level of outside expertise to the team at this time will make significant strides in our ability to achieve some forward momentum," said acting Chairman Joel Gordon. "In the meantime, ourbusiness is continuing to operate in ordinary course."

HealthSouth is the nation's largest provider of outpatient surgery and rehabilitative health care services. At its peak in 1999, the company's stock traded for $30 a share. The stock was already down 64% for the year ahead of last week's fraud allegations.