You can use SGH as a rough guide here. Syndicate (PE) buys the...

You can use SGH as a rough guide here.

Syndicate (PE) buys the debt the company cant afford to pay (galaxy in this case). Debt for equity where syndicate takes 95% of the company in exchange for extinguishing a part of the debt and not calling in the loan. Plenty of debt remains but the equity owners are also the debt holders so they can choose to continue the business and not call in the receivers.

After company gets back on track, they announce a raise to extinguish the rest of the debt. They get their original investment back and own 95% of the equity of the now (almost) profitable company.