Scroll down to #6 and #7 in that article for the answer to the question posed in the title. Holders of convertible bonds (which are "senior" to equity) are bei

Scroll down to #6 and #7 in that article for the answer to the question posed in the title. Holders of convertible bonds (which are "senior" to equity) are being forced to take a haircut before holders of common equity (which has the least seniority in the capital structure) are wiped out. To say this is unusual would be a massive understatement. In a "normal" bank failure (like with SVG), first common equity holders lose everything, then everyone else fights over what's left. This wasn't an ordinary bank failure though, the Swiss government forced UBS to buy CS, waived the requirement for shareholders to approve the transaction, and given that there was almost certainly some residual value to CS' net assets I guess they felt that shareholders had to get something out of the forced transaction.