Based on what you described (that they have operating earnings coming in the door) this sounds like a good reorg case. Whatever they did to take on so much debt

Based on what you described (that they have operating earnings coming in the door) this sounds like a good reorg case. Whatever they did to take on so much debt the debt service cost is no longer sustainable by the business. In this case when they require new funding (to pay off maturing debt or just to keep the business operating because suppliers/banks etc are no longer willing to extend credit) the new capital providers (in this case affiliates of Citi) would typically demand that they file for bankruptcy first, because the new lenders don't want to comingle their capital with the existing lenders. Funding provided post filing has priority claims on the assets of the company. During the bankruptcy the company negotiates with existing creditors to lower the debt service cost temporarily or permanently. If there is impairment to existing claims the equity ownership is essentially wiped out and new management is typically brought in by the creditors. Creditors may convert all or part of their claims into equity holdings in the new entity exiting bankruptcy. All of these are designed to orderly resolve claims and give the company a new chance, except the process can be drawn out if the parties involved have different ideas on how best to proceed. The best cases are when the creditors can agree with the management on a plan of resolution pre-filing and the bankruptcy court is used to bring certainty to the plan, in which case the process is often quite short. LBO debt structure is often designed to ease restructuring (with subordination) and holders are likely more concentrated and familiar with the bankruptcy process. If only bondholders are impaired this could be over relatively quickly and the pension claims will not be harmed (at least on paper). The problem is that the bondholders could be too rosy about the business prospect and not willing to impair their own claims enough for the company to be truly financially sound and in a few years the company may be back to the same process a second time.