I'm just going to state this plainly, no emotion, no vitriol.
With regard to "There is no cash without selling something," you are just wrong. Say it in your best Arthur Fonzarelli face..."I was wwwwrrrrrruuueeeennnnnngggg." Allied's investment portfolio consists of both equity and debt/loans. Loans constitute the majority of their portfolio. The non-performance ("non-accrual") ratio on their loan investments is something like 9%. (Sorry I don't have my 10-Q and my slide deck from the C/C in front of me.) As koolmogul has stated, they get a bundle of cash every quarter - from the payment of interest and principal on their loans (although I believe the majority of their loans are term loans with no amortization of principal).
Presumably with the 2011-maturity notes now trading in the low 80's, ALD is facing some interesting choices with the cash they are receiving, to wit, since the YTM on the 2011 bonds is now at about the same level as what they can get in coupons on mezzanine financing, they may choose to focus more on making new investments than repurchasing their debt...although with corporate spreads being what they are, if Allied can regain their Investment Grade rating or better, they could presumably go back to the debt markets to get another low-coupon deal - possibly to even refi these 9%+ bovine scatology coupons they are paying to the extorting insurance companies.