The judge didn't rule on subchapter V, that hearing is on the 21st. The judge did rule without prejudice on the motion to convert to chapter 7. The judge rules on legal, not on whether the company is viable or not. If the motion on chapter 7 were granted, the creditors get nothing, because the company owns absolutely nothing.
Subchapter V only gets them past the unsecured creditors. They have to pay them any profits for the period the court would determine. That's it. If it is denied, they have to negotiate with those creditors. In either case, the $3.5M they already owe remains, and the 3B shares in the O/S is already there and owns absolutely nothing.
In order to get any of the $5M from the toxic lender, they have to file a registration statement with the SEC so that lender can sell stock they acquire at a 20% discount. That's the deal. The company gets cash, likely in small tranches, the toxic lender dumps the stock.
And they're starting from scratch with nothing but the $3.5M owed and 3B shares already in the O/S. The whole "plan" is a warmed over version of the plan that failed, and the real plan is to get cash and let the toxic lender sell stock for profit.
This is nothing but a pump and dump.
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