"Creon saved by debt-for-equity swap"

From the Weekend FT:

Creon Corporation, a residential property finance group, claimed top spot on the Aim market leaderboard, with a surge of 171 per cent to 9½p. Traders had all but written off the company, which lends to small scale property developers, but yesterday it announced what might qualify as the London market's smallest ever debt-for-equity swap. Some £39,517 owed to a number of suppliers - including one director - has been settled by the issue of just under 1m new shares at 4p apiece.

Exactly. If the underlying business has value (and with a mortgage company there is always some value to the assets side, unless it turns out that 100% of their mortgage advances are irrecoverable), creditors have a choice between insisting on contractually agreed repayment terms, thus possibly forcing the business into administration with a fire sale of assets at less than recoverable values or waiving that payment in exchange for a share in the business. In other words a short term claim is converted to a long term claim. 

And there's no need for ham fisted government intervention, market forces make this happen. Indeed, once a government starts guaranteeing a company's liabilities, it is far less likely to happen.