The assets of the subsidiaries are separate and distinct. The reason to do this is to insulate the assets from the creditors, liabilities, and risks of the other subsidiaries. This is important because if any one of the subsidiaries is attacked by a lawsuit or needs to file from bankruptcy, it will not affect the other subsidiaries or the holding company. If a judgement again one subsidiary is awarded, the risk of loss is limited by what is held in that company and the other subsidiary will be judgement proof (assuming there is no “piercing of the corporate veil”).
In a bankruptcy proceeding, the only company effected will be the lone subsidiary, and not the holding company or its subsidiaries. In fact, some of the biggest companies in the world structure not only other companies in this type of structure, but also separate the name, logos, equipment, management, and almost every aspect of a particular business into smaller companies to prevent any one person from attacking and bankrupting any one company.