Pari passu is a
LatinLatin is an Italic language originally spoken in Latium and Ancient Rome. Through the Roman conquest, Latin spread throughout the Mediterranean and a large part of Europe...
phrase that literally means "with equal step." It is sometimes translated as "part and parcel," "hand-in-hand," "with equal force," or "moving together," and by extension, "fairly," "without partiality."
In
lawLaw is a system of rules, usually enforced through a set of institutions. It shapes politics, economics and society in numerous ways and serves as a primary social mediator of relations between people. Contract law regulates everything from buying a bus ticket to trading on derivatives markets...
, this term is commonly used as legal
jargonJargon is terminology which is especially defined in relationship to a specific activity, profession, or group. In other words, the term most often covers the language used by people who work in a particular area or who have a common interest...
.
Black's Law DictionaryBlack's Law Dictionary is the most widely used law dictionary in the United States. It was founded by Henry Campbell Black. It is the reference of choice for definitions in legal briefs and court opinions and has been cited as a secondary legal authority in many U.S...
(8th ed., 2004) defines
pari passu as "proportionally; at an equal pace; without preference."
In
financeFinance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated...
, this term refers to two or more
loanA loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s,
bondsIn finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest and/or to repay the principal at a later date, termed maturity...
, classes of shares having equal rights of payment or level of
seniorityIn finance, seniority refers to the order of repayment in the event of bankruptcy.Senior debt must be repaid before subordinated debt is repaid...
. For asset management firms, the term denotes an equal allotment of trades to strategically identical funds or managed accounts.
This term is also often used in
bankruptcyBankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed or initiate a restructuring...
proceedings where creditors are said to be paid
pari passu, or each creditor is paid
pro rata in accordance with the amount of his claim. Here its meaning is "equally and without preference."
See also
- Statute of Bankrupts Act 1542
The Statute of Bankrupts was an Act passed by the Parliament of England in 1542. It was the first statute under English law dealing with bankruptcy or insolvency...
, introducing the pari passu principle for creditors of insolvent persons.
- Seniority (finance)
- List of Latin Phrases
External links