From the top of my head:
The filing of BK was the trigger for the liquidation preference in WAMPQ. Therefore, P is entitled to CASH and yes, conversion was BEFORE the default event triggered in the Ps.
The people who tell you that K get paid cash and P get converted do NOT know jack.
Conversion of P would constitute a change on ownership which will invalidate (or partially invalidate) the NOLs of the estate.
All you need to know is K and P will have the same disposition upon emergence because they are a member of the SAME CLASS. People still do not get that.
Possible Disposition of both P and K: Continue to float and pay divy, conversion to WMI-2, partial payment, full payment, a combination thereof, etc.
imo