Originally Posted by FriendlyPilot

The bond holders do not stand to lose anything. There are more than enough assets to sell that they could recoup their assets. Why would be bond holders now want to risk exchanging their 8% interest rate on $3B for equity that could go to zero? The people that bought those bonds bought a bond that paid an interest rate based on risk. They aren't private equity investors willing to lose everything. Bonds have conditions and the people and funds that invested in those bonds did so to capture a steady return and not buy stock in Spirit. If they wanted to do that they could have just bought spirit stock.

The bond fund guidelines likely won't allow the managers to do a conversion to anything other than another bond.

You can bet that the bondholders (not the bond managers) are going to fight any conversion of their relatvely safe, asset backed bonds to some other risky asset class regardless of the "potentially bigger financial upside".