Typically (for a company at least), debt has 'cross-default' provisions in it. So that failure to pay any particular creditor causes legal triggers to trip on every piece of debt. This is prevent the company persecuting particular sets of holders, and makes it a huge incentive not to miss payments to anyone.
The problem with the arm-twisting idea is that it only requires one hold-out, and everyone gets pulled through the default process.
Right, I didn't realise that mechanism existed, thanks for the heads up. It makes sense, removing the opportunity for slippery dealings with preferential treatment of some debt over the rest.
The problem with the arm-twisting idea is that it only requires one hold-out, and everyone gets pulled through the default process.