The concept of “bailing in” a distressed bank’s creditors to avoid a taxpayer-financed public rescue is commonly accepted as one of the most significant regulatory achievements in the post-crisis efforts to end the problem of “Too Big To Fail”. Yet behind the political slogan, surprising uncertainties remain as to the viability of the concept and its optimal legal design. This paper traces the development of the bail-in concept since it was first conceived in 2010 and demonstrates that it has undergone an important conceptual metamorphosis. Bail-in, first understood as fulfilling the “redistributory” purpose of sparing taxpayers from rescuing banks, has more recently been promoted as additionally serving a “market stabilizing” function: to stem a panic and to avoid run risks.Whilst this trend is to be welcomed, it requires a number of changes to the present legal frameworks that are in place in many jurisdictions around the world. Issues to be addressed include, inter alia, to formulate appropriate criteria to trigger bail-in measures and to overcome a natural reluctance by resolution authorities to intervene and apply bail-in powers. This paper makes the case for early intervention triggers and demonstrates that liquidity provision by a lender of last resort during resolution is crucial to make bail-in credible. The paper places bail-in as a conceptual tool into the broader debate of how to deal with distressed banks and derives a number of concrete regulatory proposals.