That's sort-of how it's supposed to work? The price at the time was the market-determined value considering the uncertainty of recovery. As you mention, there were multiple hedge funds, so they would have been competing to buy up these coupons, making me suspect the price at the time reflected the best knowledge of the fund's situation and the law available at the time.

It sure seems unjust post-hoc. But I can't really think of any improvements. The rate of recovery is somewhat extraordinary, as demonstrated by the appearance of it in the press. And it would not have happened without giving organisations with deep pockets the incentives to try to effect it.