You keep equity intact to preserve NOLs, but keeping them intact does not mean recovery.
You keep sub bonds/CT to enforce subordination between senior creditors and sub bonds. By doing this the senior creditors get a few extra percentage recovery by reallocation of distribution from sub bonds to seniors bonds. Almost like double dipping.
There is a reason why things are structured this way... it is all for the senior creditors benefit, as they are the ultimate beneficiary, no one else.