Solid Energy says the Bank of Tokyo Mitsubishi would lose nearly three-quarters of the $80 million it is owed if the coal company is liquidated.
The High Court in Auckland was told on Tuesday how the Japanese bank was opposed to liquidation, but also against a rescue deal where the main lenders swap a portion of their debt for equity in the company.
Solid Energy lawyer Alan Galbraith said the Bank of Tokyo Mitsubishi is playing down Solid Energy's dire financial situation because it did not want to take any risk in a rescue deal - it only wanted to benefit.
Mr Galbraith told the court that the bank did not want to liquidate Solid Energy, because it would only get back $24 million or less of the $80 million it was owed. He described it as more than a financial "hair cut", it was a razor blade shave.
Mr Galbraith said that the new directors of Solid Energy were faced with a company in real trouble and needed a rescue package that would give it a more certain future.
However, he said the Bank of Tokyo had given the group of bank creditors an ultimatum that it would not agree to a rescue deal involving swapping debt for equity.
The Bank of Tokyo Mitsubishi started legal proceedings against Solid Energy in October, after refusing to sign up to the New Zealand Government's restructure deal.
