It makes *no* sense for him to buy Pirate debt. It costs him money. How would he get that money back? From himself?
Well that isn't exactly true.
Person sells x BTC worth of ddebt.
Person creates uncertainty in the market and buys that debt back for y BTC.
Persons profits (x-y) BTC.
Not saying Pirate is doing that but there it isn't correct to say there is no sense in rebuying your own debt.
How is that better than this:
Pirate sells x BTC worth of direct debt.
Pirate profits x BTC.
Or this:
Before he defaults, Pirate buys x BTC of PPTs.
Pirate gets those x BTC back because they pass through.
Pirate defaults.
Pirate sells those x BTC of PPTs for y BTC.
Pirate profits y BTC.
Both of these scenarios are more profitable than yours and neither of these require Pirate to buy his own debt. Notice that they both require him to sell it.