(FORTUNE Magazine) – Sometimes a fried bird in the hand is worth $20 million of junk debt on the books. A precedent-setting three-way deal in 1990 involving strapped insurer Executive Life, Horn & Hardart, former owner of Bojangles' cajun chicken restaurants, and Sienna Holdings and InterWest Partners, the financial partners who now co-own Bojangles', has proven good for all. Selling Bojangles' enabled Horn & Hardart, which had been divesting its restaurant businesses, to retire $20 million in high-yield bonds, for a saving of at least $2.8 million a year in interest payments. Executive Life, holder of that unsecured Horn & Hardart debt, came away with $6 million in cash and $14 million in Bojangles' debt, most of it secured. And Sienna, InterWest, and the new management at Bojangles', including CEO Dick Campbell, a former division manager at PepsiCo's KFC chain, paid just $5 million in cash for 33 * restaurants, with sales of $18 million in 1990, and 122 franchises. Robert Goodman, CEO of Goodtab, the Los Angeles financial adviser for Executive Life in the deal, expects more such three-way transactions. Reason: ''There are a lot of issuers who are having trouble meeting their debt obligations. For some, the best way to meet those is to exchange a business they own for a significant amount of their bonds.'' - R.T.