Agree with you. While the LEHKQ, LEHLQ, LEHNQ, and LHHMQ are called "subordinate," people mistake that for the legal term in bankruptcies. In the bankruptcy the term "subordinate" refers to an equity such as LEHMQ and all preferreds CONVERTIBLE INTO EQUITY. Anything to do with equities is legally "subordinate" because it's considered ownership in the company. So our "subordinate" debt isn't really legally "subordinate" and the preferred and common guys may have the surprise you refer to.
That doesn't mean they won't get anything. For instance, when Coleco went bankrupt 20 years ago, I received like $36 for what I paid $1000 for as a Q investment.
But after being involved in some Chapter 11s of some businesses I consulted for, I pretty much learned who gets paid and who doesn't. I believe that the unsecured notes, such as the Capital Trusts, will receive upwards of 10% on face. The Senior bonds may receive more. But don't pay attention to the prospectus that says they'll get paid first no matter what because the Courts always base it on percentages and they don't give zero to non-legally subordinated creditors. So it's not going to be, "Senior's get 80%, juniors get zero." Haven't ever seen a bankruptcy like that.
DISCLAIMER: I am a dirty, rotten penny investor. I am not compensated by any stock. I've asked them to pay me, they refuse. I buy stock on the open market. I sell it there. I like money. I am greedy. I am under the care of a psychiatrist.
AI
