Even before WMI's BK, PIERS already agreed to the subordination to seniors. This is stated in the Sept. 13, 2011 Opinion. So it would not matter if in BK, seniors got no interest, FJR, etc., PIERS are still subordinated to seniors and must make up the deficiency interest to seniors.
As for equity being subordinate to creditors, yes, that is true, however, once the waterfall gets passed the PIERS, the PIERS are essentially crammed down in BK (and considered paid in FULL), therefore PIERS CANNOT have a second bite at the apple (by asking to be replenished after paying off senior's interest) and the waterfall continues to equity, prefferds first in line ...
Once out of BK, PIERS are going to make the deficiency interest to seniors.
As far as PIERS vs. SNH for making up the difference in interest, I think that PIERS have NO STANDING because, if I recall, it is in the Courts discretion to invoke FJR and if I recall, Judge stated FJR was NOT a punishment or something to that effect. PLUS, PIERS agreed to subordination BEFORE BK.
HUQ's are fvck'd either way, just less fvck'd if they get crammed in BK.
imo
