I think it won't go that far ...
from the news reports i've read, I think the secured bondholders have a very strong case.
**
Bankruptcy law and secured debt, as i understand it, goes something like this:
the secured creditors are entitled to the proceeds from the sale, trade, or exchange of the property that secures their claims. They get this ahead of anyone and everyone else, as long as fraud was not committed in the issuance of the secured debt.
in addition, any portion of their claims that is not repaid by sale [etc.] of the property securing their claims becomes an ordinary debt of the company and they are entitled to the same proportionate payout on that remaining claim as the other claimants in that class.
In the case presented, it appears that the secured bondholders will receive less, overall, than the unsecured debt holders -- which flies in the face, imo, of the bankruptcy laws and the contract under which the secured debt was issued.
**
the reason I don't think it'll go to the Supreme Court is that the bondholders' appeal will be heard in the Federal District Court and then in the Appeals Court.
Both of these require significant time to act and the 'goal' is to do this whole thing in 60 days.
I think the Appeals Court will uphold the bankruptcy law as I understand it if the case ever makes it that far. But, the company can't hold out that long, so they'll have to give ground on the issues.
