What does the term "pari-passu" mean in financial contexts?

The correct answer is Equal footing or equal treatment.

In News

• "Pari-passu" is a Latin term meaning "equal footing."
• It signifies that multiple parties or claims are treated equally without preference or priority.

Key Points

• Used in bankruptcy proceedings to ensure all creditors receive repayments on an equal basis.
• Commonly found in loan and bond agreements to maintain equal treatment among investors.
• Ensures no party is given preference or priority over others.
• Also applied in wills and trusts to guarantee equal distribution among beneficiaries.

Additional Information

• Bankruptcy Proceedings
  • Courts use pari-passu clauses to repay creditors in equal fractional amounts.
• Pari-Passu Clauses
  • Included in debt instruments to maintain parity among lenders or bondholders.
• Application in Trusts and Wills
  • Ensures equal distribution of assets among beneficiaries.
• Financial Instruments
  • Used to prevent preferential treatment in financial contracts and obligations.