Pulled the following post from IV board. The poster's theory has merit given all the shady events going on over at Arcan:
It's predicated on the idea that management has a secret handshake deal with CPG (or PBN, et al) to sell out in the near future for around $1.80. Knowing some middle rank employees will get screwed as they will not only lose their jobs but lose out on what few options they have executable only at higher prices.....mgmt issues a million or so new options to them that will be good at lower prices....a reward for hard work trying to make this pig fly.
To help out major stake holders, shorting programs are initiated in order to panic the masses into lowering their expectations, selling into the wave ....to some low point where the stakeholders can swoop in and suck up millions of shares at low prices.
The buy out takes place (pretty soon, like early Oct), the stakeholders break even or a bit ahead instead of garnering huge losses, most mgmt keeps their jobs or get huge parachutes, and the ordinary shareholders get a gel job.