The deadline for Annie Leibovitz to repay her $24 million loan from Art Capital Group passed last night at 11:59 p.m. She didn't (her spokesman says she's trying to "work things out"), but Art Capital is mum. What's going on?

Now that Leibovitz is undeniably in default on the loan, it seems like declaring bankruptcy is her only option. And even if she doesn't want to do that, Art Capital seems ideally situated to force her into bankruptcy. But to judge by Art Capital's silence and Leibovitz's hopeful noises about "resolv[ing] this matter," it looks like neither party wants bankruptcy. Why not?

One reason can be found in this interview Reuters' Felix Salmon conducted with Art Capital's CEO Ian Peck back in June, in which Beck revealed his fear of what bankruptcy judges can do to his finely calibrated deals:

Peck is pretty puritanical about bankruptcy — he won't lend to people who have declared bankruptcy in the past, and he's afraid of what might happen to his liens in bankruptcy court, so he wants to avoid that if at all possible.

Right now, Peck can claim ownership over Leibovitz's photo archive, which he values at $50 million, and her homes in Rhinebeck, N.Y., and Greenwich Village, as well as 12 percent interest on the loan and 25 percent commission on the sale of the archive. If she files for bankruptcy, a judge could muck around with those numbers, reduce the interest rate, and cut him out of the commission. That sort of uncertainty is what he means when he says he's "afraid of what might happen to his liens." So if Leibovitz actually appears to be making movement toward finding an angel to help refinance the deal and pay off Art Capital everything it's entitled to, Peck might prefer to give her some time to work it out over throwing the bankruptcy switch and putting everything in the hands of a judge. Who might that angel be? Goldman Sachs is one of the financers of the Art Capital loan, and it has said it would like to find a way to refinance and help Leibovitz escape Art Capital's clutches.

But there is an upside to bankruptcy for Art Capital: it would free them up to sell the archive. It's important to note that, according to the terms of Art Capital's loan, it is already entitled to sell the archive and the homes right now, and has been for some time. There are two potential reasons that it hasn't: Either no buyer would plunk down the cash for the rights to the photos when the deal is surrounded by litigation, or Art Capital vastly overestimated the value of the archive and no bidder will come near the price that Art Capital needs to recoup the loan. If it's the former, bankruptcy would clean up the legal mess and allowing Art Capital to sell it by offering any buyer a free and clear title on the archive.

But there's another way to clear up the legal mess: Clear up the legal mess! If Leibovitz and Art Capital can come to terms and settle their claims and sell the archive outside of bankruptcy, both could benefit—Leibovitz wouldn't be bankrupt, and Art Capital would get everything it thinks it's owed. Alternatively, if Goldman Sachs or someone else is stupid enough to come along and take over the loan and pay off Art Capital enough to make it happy, then everybody still wins.

A potential monkey wrench would be if one of Leibovitz's other creditors files a petition for involuntary bankruptcy against Leibovitz before she and Art Capital can work it out — and we know that at least one creditor has been contemplating such a move for months.