potkettleblack has the right idea, but some of the mechanics of finance are wrong.
Any bank behind emerald would have no interest in converting debt to shares - at most, Emerald would be worth 4-5m, based on assets.
To put that in perspective, a bank would earn that in interest, in one day, on slightly over £1bn. Bearing in mind that RBS earnt twenty odd billion in profit, 5m is peanuts and not really worth the hassle.
Also, when you hear of banks 'investing' they usually arent directly taking shares in companies - typically they will be underwriting a share issue, debt provision or credit line. To say that RBS or whoever is behind Emerald would take a share is the equivalent of saying that Mastercard own a share in me cos i havent paid the bill.
Now, you are assuming that the bank would value the aircraft / offices / spares at the same rate as the owners do on their balance sheet? That is incorrect too.
There are many airlines that leverage finance against an aircraft for its commercial or resale value.
How do you value an aircraft type that is operated by maybe one or two other carriers around the world? It either has a) scarcity value (Such as the AN124s), or b)Junk value - such as the dodgier russian types.
So lets assume that Emerald have valued the aircraft at insurable rates. That puts a well maintained 748 at about $900,000in value. However market value for acquisition is about...wait for it....50% of that.
So the bank are immediately being asked to invest in a business with assets that are possibly overvalued, have literally no resale value, and can only be operated by a group of very select individuals (The trained pilots and mechanics of Emerald). Fine and dandy say the fly boys, we will do a good job - but the aviation industry proves otherwise. Pilots are constantly arguing for higher wages, less hours etc etc. All reasonable enough to you guys, but not to the financier.
Now before you all go mental at me, you have to remember who has the money to invest (The financier/Bank) and who wants it (The chaps looking to buy the airline), its all about vested interests, and who holds the purse strings.
Put yourself in the banks shoes - if they remain behind Emerald, they will be held at the mercy of a bunch of whining aircrew and engineers who want the latest gadgets for the aircraft, and dont want to fly too many hours. They will also be the owners of technically worthless assets, with little if any chance of resale.
Now in the pilots and engineers shoes, you are being held at the mercy of a bloodsucking venture capitalist or money grabbing bank, who has done nothing to help the airline out of its current predicament.
So ignoring alll of that, you mention that buyouts usually involve debt - very true. These deals are referred to as leveraged buyouts.
To give you an example. i want to buy a bakery, that takes in 2k profit a month (24 a year). It gets valued at 72k by the lawyers - fine and dandy. Now for me to acquire this, i dont need to find 72k. I need to work out what the payments are to service 72ks worth of debt a month. So lets assume that that figure comes out at 1800 per month loan repayment over 5 years. We all agree, and ive picked up the company, and 200 quid a month income for putting exactly how much money down?
Now this deal only works if the company that i am acquiring has one of two things: a) no debt at all or b) strong enough cash flow to support my debt.
Whats the bets that Emerald has either of these qualities?
That all sounds fairly bleak, but Pot has the right sentiment - if enough people actually put their hands in their pockets, finance can be found. Its called lock in money - if me as a bank knows that the company failing is really going to hurt you financially as an individual, i am more inclined to think you will work your nuts off to make it suceed, and consequently i am far more inclined to come to an arrangement to back your buyout.
my fingers hurt so im stopping typing now.