Invested in company via $50K convertible note, now filing chapter 11 sub V and offering equity, what should I do?

Hi,

Urgent question because the deadline is Thursday.

In June, I invested $50K in a company with a convertible note that was to mature in June, but just found out the company is filing chapter 11 sub V. The company has $500k in assets, which would only pay back 1-5% of the debt, so they are offering all notes to convert to equity early as they restructure.

Should I take them up on this? Obviously it gives them a longer runway to try and be successful, and there's at least some chance of them succeeding. Or do I say screw it and try to get a small percentage of my investment back and just stick with the debt, but what's the point of that?

One thought I had: Is there a tax advantage one way or the other? Can I write off the $50k note, or alternatively, if the company fails, can I write off my equity loss if I convert?

Are they offering to convert to equity bc they care about their investors (a small pool of friends and acquaintances) or bc it keeps them out of trouble?