In effect, the depositors would take the first loss, and the junior creditors would be protected.

FORBES: The Wrong Way To Restructure Europe's Myriad Insolvent Banks

In the Chrysler case, junior creditors (the UAW) were granted priority over the senior creditors (the bondholders).

FORBES: Random Friday Thoughts

In effect, it goes to pay the junior creditors.

FORBES: The Wrong Way To Restructure Europe's Myriad Insolvent Banks

What may be needed is a rejigging of banks' balance-sheets to try to contain this panic, with a clearer line between those who bear losses, including shareholders and junior creditors, and those, such as depositors, senior creditors and counterparties, who can be assured of business as usual.

ECONOMIST: The task of sorting out banking is far from finished

Critics of the government's plan to reorganize Chrysler say it rewards junior debt holders at the expense of senior secured creditors, some of which have agreed to take 30 cents on the dollar for their investment.

FORBES: Magazine Article