Dual holders owning both debt and equity in a company can reduce default risk by optimizing their assets. The study compares two common priority structures for debt and shows that having private debt junior to external debt lowers default probability more than having them equal. Private debt can displace equity financing, leading to negative equity values, but these are offset by positive private debt values. Increasing private debt is preferred by dual holders, and tax benefits from debt can eliminate default risk and credit spreads. In some cases, bankruptcy costs are zero, making all debt risk-free and removing differences between priority structures.