I'll give you one thing: the assets of the company are pledged to the senior bond holders, but then after the bonds are sold the PE company generally disposes of the assets, leaving nothing backing the senior debt.

The junior debt, of course, has nothing pledged to back it at all. Junior debt in leveraged buyouts is pure gambling.

This is in the territory of not even wrong

The part where they skim millions in "management fees" to take it private, and then leave it floundering under so much debt that it dies?