“The people that currently own 100%, the current stock-holders, will now get 11 cents on the dollar?”
No they are slated to get 1%, and the bondholders 10%.
In bankruptcy court the common stock holders rate to get 0%, and the bondholders almost everything.
Why should the bondholders agree to take less? Are they going to be sent to GITMO if they say no?
Not literally, but perhaps figuratively.