1) Pay off litigating common shareholders with warrants to buy more commons at a low price later. Note: this doesn't mean offer it to all common shareholders. Just the ones that are named plaintiffs. 2) Offer the juniors a conversion to common at an extremely generous ratio. 3) Declare the seniors extinguished, which also ends the NWS.
That should do it. Doesn't cost the government a penny, and rewards all plaintiffs. Offering the conversion to all junior pref shareholders, as opposed to just named plaintiffs, also benefits the government because it makes a recap easier, allowing new non-cumulative preferred shares to be issued (there are too many right now).
The "threatened" litigation part is a complete nothingburger.
ONE bargaining chip that they have at their disposal is the warrants. I did not say that to start an argument over what effect cancelling the warrants would have with anyone. Merely to point out that many shareholders would be happy to see the warrants go away.