''Pari passu'' is a

Latin Latin ( or ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken by the Latins (Italic tribe), Latins in Latium (now known as Lazio), the lower Tiber area aroun ...

phrase that literally means "with an equal step" or "on equal footing". It is sometimes translated as "ranking equally", "hand-in-hand", "with equal force", or "moving together", and by extension, "fairly", "without partiality".

Etymology

*'' pari'' is the ablative singular

masculine Masculinity (also called manhood or manliness) is a set of attributes, behaviors, and roles generally associated with men and boys. Masculinity can be theoretically understood as socially constructed, and there is also evidence that some beh ...

(since it must grammatically agree with ''passu'') of the

adjective An adjective (abbreviations, abbreviated ) is a word that describes or defines a noun or noun phrase. Its semantic role is to change information given by the noun. Traditionally, adjectives are considered one of the main part of speech, parts of ...

''par'', "equal". If it were

nominative In grammar, the nominative case ( abbreviated ), subjective case, straight case, or upright case is one of the grammatical cases of a noun or other part of speech, which generally marks the subject of a verb, or (in Latin and formal variants of E ...

, "an equal step" it would be ''par passus''. *'' passu'' is the ablative of the Latin noun ''passus'', "step". In legal terms, pari passu means "on equal footing." It refers to creditors, claimants, or shareholders receiving equal treatment without preference. Common in bankruptcy and finance, it ensures proportional distribution of assets, rights, or obligations among parties. This term is commonly used in law. '' Black's Law Dictionary'' (8th ed., 2004) defines ''pari passu'' as "proportionally; at an equal pace; without preference".

Usage

In inheritance

In inheritance, a ''pari passu'' (''

per capita ''Per capita'' is a Latin phrase literally meaning "by heads" or "for each head", and idiomatically used to mean "per person". Social statistics The term is used in a wide variety of social science, social sciences and statistical research conte ...

'') distribution can be distinguished from a '' per stirpes'' (by family branch) distribution. For example, suppose a

testator A testator () is a person who has written and executed a last will and testament that is in effect at the time of their death. It is any "person who makes a will."Gordon Brown, ''Administration of Wills, Trusts, and Estates'', 3d ed. (2003), p. ...

had two children A and B. A has two children, and B has three. * If the testator leaves his or her entire estate to his or her grandchildren in equal shares ''pari passu'', each grandchild would inherit one fifth of the estate. * In contrast, if the estate was left to the grandchildren ''per stirpes'' (by family branch), the children of A would share one half of the estate equally between the two of them, and the children of B would share one half of the estate equally amongst the three of them.

In lending, bankruptcy and default

This term is also often used in the lending area and in

bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...

proceedings, where creditors are said to be paid ''pari passu'', or each creditor is paid ''

pro rata ''Pro rata'' is an adverb or adjective meaning in equal portions or in proportion. The term is used in many legal and economic contexts. The hyphenated spelling ''pro-rata'' for the adjective form is common, as recommended for adjectives by some ...

'' in accordance with the amount of his claim. Here its meaning is "equally and without preference". There have been cases where decisions were based on different interpretations of the term. In the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...

, as the result of the

Greek government-debt crisis Greek may refer to: Anything of, from, or related to Greece, a country in Southern Europe: *Greeks, an ethnic group *Greek language, a branch of the Indo-European language family ** Proto-Greek language, the assumed last common ancestor of all kn ...

, a retroactive

collective action clause A collective action clause (CAC) allows a supermajority of bondholders to agree to a debt restructuring that is legally binding on all holders of the bond, including those who vote against the restructuring. Bondholders generally opposed such cla ...

passed by the Greek government with the support of the ECB and IMF, enabled the debtor (who also controlled the courts) to impose a 70% loss on the creditors, more than 75% of whom had voted in favour of the cut. In this case, ''pari passu'' means that all private-sector investors are equally treated.

Etymology

Usage

In inheritance

In lending, bankruptcy and default

See also

References

Notes

Further reading