PAnews:
Lets igonre MD specifically for a minute.
If a company's assets are far lower in value than the liabilities, nothing can improve significantly until that situation is rectified. In America, we have a bankruptcy code which in essence gives unsecured creditors very little power. So if you believe a company has assets that have value, by running the company through a bankruptcy, you can peel out those assets either through a reorganization or through a 363 sale. Once those assets are unencumbered by the previous liens, those assets can be utilized for the benefit of the new owner. Now remeber an asset includes not only physical assets but contracts and rights of which you can chose which ones to keep and which ones to disavow. Now the good news is that those assets which are valuable will be picked up, but the bad news may be that those which are deemed not that valuable would be left.
So, one could argue that the "worst" is the only way and the quickest way that a situation such as MD can be resolved.