Self interest. The liquidation value of this company at that time was less than the discounted present value of the income stream from interest payments at (10 and 15%) plus the present value of the retained option to liquidate the company when those high-interest bonds come due again. Bondholders would have definitely lost money if they had forced liquidation at that time, which is evident from the incredible value that this company's share price represents ASIDE FROM the amount of debt that it carries. Retaining present management was the most assured way to provide those rich interest payments while preserving the liquidation value of the company, and present management (thankfully, and unusually for today's business world) stood up for equity holders and convinced bondholders of that value proposition. At least that is all I can figure--I don't think that bondholders were "being nice." That is the reason Mary Junck deservedly got a bonus from equityholders for her work on this. It was an amazing job, and I expect this would make an interesting business school case study.