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The secret sauce is that the S.P.V. would float 12 classes of bonds, from triple-A to a lowly Ba1.
Mr. Kennedy calls himself a sector rotator, moving among different classes of bonds as well as among issues of the same class.
The company's largest unsecured creditors include the Wilmington Trust and the Manufacturers and Traders Trust Company, which represent several classes of bonds.
And several classes of bonds gained anywhere from 2 to 6 percentage points in value, according to Standard & Poor's Leveraged Commentary and Data service.
The different classes of bonds have the same stated maturity date, but if cash flows from the Trust 4 assets exceed the amounts needed to make interest payments, the trustee uses the excess to retire the classes of bonds in alphabetical order.
A preliminary question arises from the fact that representatives of the two classes of bonds are made defendants, and that a part of the relief asked is a sale of the 30,000 shares of stock of the North Carolina Railroad Company, belonging to the state of North Carolina, in satisfaction and discharge of all the mortgages upon such stock.
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Next, we introduce another class of bonds with embedded options in the form of convertible bonds.
Bank of New York Mellon, a trustee for the class of bonds owned by High River, is also a party to the lawsuit.
He had bought one class of bonds when they were 10 percent below normal prices, and then watched them climb 5 percent, a multimillion-dollar profit in a few days.
Popular's shareholders and holders of its riskiest class of bonds get wiped out, which is what's meant to happen, and a troubled bank ends up in the arms of a stronger owner.
The only creditors who reached an agreement with Puerto Rico were the holders of a class of bonds, about $9 billion worth, that were sold to raise money for the island's public power utility.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com