The remaining 7 percent of equity would go to more senior bondholders who own $350 million in SCI bonds.

Unlike in many previous European bank bailouts, junior bondholders were not bailed out and lost their investment completely, although senior bondholders were still protected.

Mr. Bienenstock represented junior creditors in the National Gypsum bankruptcy, considered the classic example of low-balling, where senior bondholders walked away with almost the whole company.

There are, as it happens, reasons that senior bondholders might want to insist on being paid off.

In a related development yesterday, the interim management of HealthSouth said some senior bondholders had notified the company that it had defaulted on their debt agreement.

The interim chairman, Joel C. Gordon, said the notice by senior bondholders was an attempt "to extract greater value at the expense of other stakeholders."

Kohlberg, Kravis has apparently failed to persuade a group of Hillsborough's senior bondholders to accept a proposed financial restructuring of the company.

Macy promised the most senior bondholders $165 million in stock when it emerged from bankruptcy, but gave junior bondholders only the right to buy 25 percent of its shares later.

He asked why senior bondholders had to be treated in the same way as depositors.

Very few people other than the senior bondholders understand it.