From what they've said, both the convertible notes and the hedge obligations are secured by fixed and floating charges over NGF's assets.
If NGF was to default, I assume there is a method in the documents for sorting out who (the hedge counter-party or the convertible noteholders) have priority over what assets.
However, where one of the other parties is the defaulting party (in this case, LBCC as the hedge counter-party), I'd assume that just means the convertible noteholders wouldn't have any competition in the fixed and floating charges, should NGF subsequently default.
Just guessing.
NGF Price at posting:
22.5¢ Sentiment: Buy Disclosure: Held