In this case, your second creature becomes equipped, and for all practical purposes the first creature is now unequipped
The activated ability forces opposing players to give you extra combats, making for an aggressive Gruul deck
So, if you have them both in play, Sephiroth can sacrifice Aerith for his fourth trigger, transforming, and then reap the benefits of all the +1/+1 tokens Aerith had built up from his attacking
Flayer of Loyalties has Backup

King, Seed Cursed Castaways Unit Fixed font: Panacea Pills Overcharged El Ratonero, Shrinking Giant Kumiho Violent Hallucination The Best in the World Observation Typo fixes: The Hanged King's Tragedy Sub-Reality Passage Mister Moon Otis, Dream Inducer Bobble's Guidance Big Charlie, Generous Cow (wrong scp number) Fixed frame: Audapaupadopolis, the First City Audapaupadopolis, the First City (Masterpiece ver) Added reminder text: Memories Found Version 0.7 Date: 2022-06-02 11:16:42 The "I'm going to print this" update Change log: New cards: Chalkland Projection Draconic Gateway (Masterpiece ver) Self-Insert Human Sickness Bearer Observation Dr King, Seed Cursed Demonic Contract Demonic Contract (Masterpiece ver) Digital World The Writers' Doing Underpants of Holding Tommy, Steve, The Shifter Shark Shifter Amiable Cannibal The Ethics Committee Performance Enhancing Slime One Final Prank Warped Remembrance Ninely Accompanied Ghost Beguiling Marching Band The Bodies in the Water What Place is That Again
