Pari Passu

Pari Passu is a Latin term meaning “on equal footing” or “without preference.” In legal and financial contexts, it refers to a situation where multiple parties, claims, or obligations are treated equally and without priority over one another.

For example, in Bankruptcy proceedings, unsecured Creditors may be paid on a pari passu basis, meaning they will receive payments proportionally based on their claims without one Creditor bEINg favored over another.

In the context of debt Securities, if multiple tranches of Bonds are issued pari passu, they will have the same rank in the event of Liquidation, and all bondholders will be paid simultaNeously based on the available Assets.

One case illustrating this principle is In re Enron Corp., where the court ruled that the claims of certain Creditors were to be treated pari passu with other Creditors in the Bankruptcy distribution.