The losers in this reshuffling are the long-term debtholders who get stuck in the bad bank.

WSJ: Banks Need Fewer Carrots and More Sticks

Debtholders often wind up with control of the company and stockholders are wiped out completely.

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NextWave's debtholders have agreed to the terms, and a majority of its shareholders have agreed to support the transaction.

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Some debtholders did not get their money back straight away, a technical default.

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Under our plan, the debtholders will get all of the equity in the "good bank" and therefore all the upside of its future performance.

WSJ: Banks Need Fewer Carrots and More Sticks

Whatever the method they choose, the message for all countries being held to ransom by their banks' senior debtholders is clear: don't start from here.

ECONOMIST: Restructuring banks

Since the New Year, Mr. Goldfield and other advisers to the receiver have been negotiating almost daily with the city's debtholders and public-employee unions, seeking concessions.

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"Once we start to see this happen, we will stop believing that governments will support senior debtholders and we will downgrade our ratings, " said Bridget Gandy, managing director for financial institutions at Fitch Ratings.

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In fact, long-term debtholders who have debt claims against the bad bank and equity claims against the good bank will be better off under this plan than if the bank were liquidated or continued to operate as one bank.

WSJ: Banks Need Fewer Carrots and More Sticks

High River, which owns some of Realogy's senior bonds, alleges the repayment of its securities would be unfairly delayed under the debt deal announced last month since it may give new debtholders certain benefits such as moving them up on the repayment list if Realogy goes bankrupt.

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