This is really good point. The short position that has remained...

This is really good point. The short position that has remained relatively stable for so long could well be Anchorage selling the equity short with the intent to go long the debt and then held as a hedge against the debt.

This is classic distressed debt arbitrage. As Warnie mentioned this is done to protect themselves in the advent that the company value continues to fall and their long bond position deteriorates, equity should decline at a quicker rate as it is the residual claim over assets and secondary to bonds. If prospects improve initial benefits to the credit accrue to bond holders over equity holders.