Both Longs and Shorts should follow the path of ELN (aka Elan). They laid off employees and restructured before getting the drug back to market. However, they had a much better cash position than AFFY. It is unclear what will happen here.
If I was a conspiracy theory believer I would say the CEO is a saboteur: The bashers could not have written a worse PR: Limited resources, BK possibility! Most companies dodge the BK mention as long as possible(GM, Kodak, etc.) and usually posit a huge staff reduction in the best possible light.
The silver lining is that the wolves of Wall Street don't care about fundamentals and they will soon have a shorts weenie roast. In fact, some savvy hedge funds will actually make money BOTH WAYS.