"On the former, if KRY goes to arbitration I suspect they will be, at least technically, bankrupt. But maybe I have this wrong - my understanding is that the bondholders will seek a lien over KRY's assets (as arbitration is acceptance of a change of control), KRY will seek bankruptcy protection so that they can pursue the arbitration case."

Are you a lawyer?

Seems like a lot of assumptions about complex issues that are not at all clear and are open to prolonged litigation that could very well take much longer than an arbitration. Sure they could go either way in the end, but their resolution is not a foregone conclusion as you suggest.

Moreover, KRY would have a reasonable chance at suspending a BK proceeding during the pendency of the arbitration.

Perhaps you could cite some cases that support your assumptions and educate the board.