The term “pari passu” denotes the practice of treating things equally and impartially, without showing favoritism towards any particular entity. In the event of a company’s bankruptcy, all creditors will be paid their dues pari passu, ensuring that each creditor receives an equal share of the money without any discrimination.
Pari passu, a Latin term meaning “by equal step,” refers to the principle of treating things or people equally and without favoritism. In the financial context, it signifies that creditors or investors will be allocated their portion of a company’s assets or profits in a proportional and unbiased manner. For instance, if a company becomes insolvent and needs to distribute its assets among creditors, they will be treated pari passu. This implies that each creditor will receive a share of the assets corresponding to the amount they are owed, without any preference given to one creditor over another. Another example is the treatment of preferred stock and common stock. If a company issues both types of stock, the dividends paid to each will be pari passu. This means that the dividends will be distributed proportionally based on the number of shares held, without any preference given to one type of stock over the other. These examples exemplify the concept of pari passu, which ensures equal and unbiased treatment of things or people. In financial terms, it guarantees fair treatment for creditors and investors, ensuring they receive their rightful share of a company’s assets or profits.
“Pari passu” is a Latin phrase that means “on equal footing” or “at an equal pace.” In legal contexts, it refers to the equal treatment of creditors or parties involved in a legal matter.
In bankruptcy cases, the principle of pari passu ensures that all creditors are treated equally and receive a proportional share of the debtor’s assets. This means that no creditor can receive preferential treatment over others.
Yes, parties can agree to waive or modify the principle of pari passu through contractual agreements. However, such modifications must be explicitly stated in the contract and agreed upon by all parties involved.
Yes, there are certain exceptions to the principle of pari passu. For example, secured creditors may have priority over unsecured creditors in the distribution of assets. Additionally, certain debts, such as child support or tax obligations, may also take precedence over other debts.
In the context of bondholders, pari passu means that all bondholders have an equal claim on the issuer’s assets and are entitled to receive equal payments of interest and principal.
No, pari passu does not typically apply to shareholders. Shareholders’ rights and entitlements are governed by the company’s articles of association and applicable corporate laws, rather than the principle of pari passu.
Yes, pari passu can be applied within different classes of creditors. For example, if there are multiple classes of bondholders, each class may be treated equally within their respective class, but not necessarily on an equal footing with bondholders in other classes.
Yes, a court can order the application of pari passu in certain legal disputes, particularly in cases involving the distribution of assets or the treatment of creditors. The court’s decision will depend on the specific circumstances of the case.
If a debtor violates the principle of pari passu by favoring certain creditors over others, it may be considered a breach of contract or a violation of bankruptcy laws. The aggrieved creditors may take legal action to enforce their rights and seek appropriate remedies.
While the principle of pari passu is widely recognized and applied in many legal jurisdictions, its specific application and interpretation may vary. It is important to consult local laws and seek legal advice to understand how pari passu is applied in a particular jurisdiction.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/pari-passu/
- Modern Language Association (MLA):Pari Passu. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/pari-passu/.
- Chicago Manual of Style (CMS):Pari Passu. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/pari-passu/ (accessed: May 09 2024).
- American Psychological Association (APA):Pari Passu. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/pari-passu/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts