[PeterisP]

IF "the underlying company reasonably could be expected to continue operating were its debt ratio lowered". That's always debatable, and even moreso in the current economic circumstances - I would not be certain that some airline will be able to return to profitability any time soon.

It makes all sense that a bondholder may calculate that liquidating the company and selling off the assets will allow them to recover more of that debt than having the company continue operating. If so, bankruptcy is preferrable - and if others disagree and believe that the company will be profitable, the bankruptcy process allows various ways that essentially allow the "believers" to gather funding to pay off/buy out "unbelievers".