The MM's are afraid of them. The issue is that you are taking a risk that the shares that you are getting from the note holder and flipping into the market are not securities exempt from registration. That is a risk that nobody wants. No lawyer worth their salt ill give you an opinion that the shares are exempt from registration (which is what MM's are asking for)..
This change coupled with tightening of the naked short rules (which note holders have used in the past to suppress share prices) have put a definite chill on the note market.
The best way out for issuers (like ECOS) with note obligations is to try and sell shares into the market using a normal registration statement to raise capital to pay off debt. Unfortunately in pinkyland that is hard to do. Who would buy those shares.
My guess is the note holders just sit here and let there notes earn default interest and hope for the best.
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