What is the issue you seek to have clarified? That the shares have to be registered before they can be shorted or that conversion rights under the Series D and E convertibles allow covered shorting?
At face value, your post seems to doubt that the common shares have to be registered before they can be shorted. I stated my reasons as to why I believe they need to be registered first, otherwise it would seem to be naked short selling.
However, I get the impression that you don't believe they can engage in covered shorting of the stock to which they have conversion rights.
"Covered" shorting is a short position in which the seller has the means of meeting the obligation. For example, a person who is short a call option and long the stock. It is very similar to using "covered options."
The conversion rights under the Series D and Series E shares give the financiers the means of meeting the obligation of covering their short positions. The covenants of these convertibles describe how many shares may be considered an "underlying long position." When on has an underlying long position, it is considered "covered" short selling and perfectly legal, even in the U.S.
From the SEC:
A. Background and Current Short Sale Regulation
A short sale is the sale of a security that the seller does not own or any sale that is consummated by the delivery of a security borrowed by, or for the account of, the seller.10 In order to deliver the security to the purchaser, the short seller will borrow the security, typically from a broker-dealer or an institutional investor. The short seller later closes out the position by purchasing equivalent securities on the open market, or by using an equivalent security it already owned, and returning the security to the lender. In general, short selling is used to profit from an expected downward price movement, to provide liquidity in response to unanticipated demand, or to hedge the risk of a long position in the same security or in a related security.
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