Bonds and Control Issues. Bondholders can make life difficult, A nasty fight is going on between the bondholders of HealthSouth and the company's management. The Franklin mutual fund group purchased more than 25% of the bonds through the bond market at between 51% and 69% of face value. Franklin says that although the bonds don't mature until 2009, HealthSouth's failure to file financial statements in a timely manner means that the bondholders have the right to demand payment earlier.

Franklin tried to trigger acceleration of the bond payments on March 11, before the Jefferson County Circuit Court granted a temporary restraining order leading to today's hearing.

HealthSouth claims Franklin approached HealthSouth and said it would waive any claims of a technical default if the company would pay an 11 percent premium on its bonds, which would have meant $253 million.