I think KBM has a large short position that they were going to cover using some of the stock they got in a conversion. Now they are stuck with that position and the possibility that they will need to take a huge loss when HJOE is relisted. This is big problem for KBM if it goes to trial. What are they going to say .... "Judge we need the shares because we were shorting the stock of the company we loaned money to" ?

KBM needs to settle, and quietly take the loss on the short, it is the only way to avoid being seen as the criminal organization that the are.
It might suck, but is still better than jail time.