I think your theory is a pretty realistic scenario and it might explain why the trustee insisted on the EC getting involved as quickly as it did - to ensure that our settlement is not peanuts, like JPM's first offer to Bear Stearns shareholders.
While we're on the subject, I have a valuation question for anyone willing to provide meaningful feedback.
Up to now, we've based our settlement estimates on a lump sum settlement flowing down to commons - yielding a conservatively estimated $12+ recovery for the UQs. What can we gauge the commons to recover if thepennyguy's scenario plays out and the Ps and Ks are converted to JPM preferreds? What metrics can/would we use to estimate?