It's important to add though that in DA's case I believe the floating convertible debt is a small portion of their current debt/equity. Any convertible debt or equity which converts at a fixed price that is above the current share price is not "death spiral". In addition, as I pointed out earlier, anyone who already has a large long position in the stock would be foolish to begin a death spiral as they would likely loose far more in the decline of their holdings than they could make on the death spiral.
Lastly, even with death spiral financing, as long as the market cap is fairly low, another large investor who believed the company would succeed (and had a high tolerance for risk) could buy up whatever shares became available and prevent the price from falling, thus rendering the death spiral ineffective.
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