Pari Passu

Pari passu is a Latin term that means “with equal step” or “on equal footing.” In finance, it is used to describe the treatment of multiple creditors or investors, indicating that they should receive equal payment or distribution of assets when a debt is repaid or a company is liquidated. For example, if a company has multiple outstanding loans from different creditors, each creditor should receive an equal share of the company’s assets if the company goes bankrupt and the assets are distributed to repay the loans.