Resonate Blends Inc (KOAN)

[mdimport]

In Chapter 11 the debt ladder becomes very important. Senior secure debt ranks higher than junior, Junior ranks higher than Preferred, and Preferred ranks higher than Common. There's no net assets, so Common and Preferred would be wiped, and debt holders would convert some or all of their debt into fresh Common for a restart post Chapter 11.

Auctus is in a worse position now because they hold Common stock. They've basically decreased their security on the debt ladder, and converted at a high price point.

http://www.investopedia.com/terms/s/seniordebt.asp