There's been plenty of comments from those sitting on both side...

There's been plenty of comments from those sitting on both side of the fence. What seems to be missed is?

What if the convertible note has already been drawn to the full $2m. The holder of cnote in all likelihood was an existing shareholder who has sold above $1, to then use the cnote as a arbitrage. Ready to repeat the process. The cnote may even be renegotiated to award shares at a lower price when the company is unable to repay. The company can then profess to be "screwed" by the cnote holder.