World Library  
Flag as Inappropriate
Email this Article
 

Pari passu

Pari passu is a Latin phrase that literally means "with an equal step" or "on equal footing". It is sometimes translated as "ranking equally",[1] "hand-in-hand", "with equal force", or "moving together", and by extension, "fairly", "without partiality".[2]

Contents

  • Etymology 1
  • Usage 2
    • In inheritance 2.1
    • In lending, bankruptcy and default 2.2
  • See also 3
  • References 4
    • Notes 4.1
    • Further reading 4.2

Etymology

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, an in pari passu (per capita) distribution can be distinguished from a per stirpes (by family branch) distribution.[3]

For example, suppose a testator had two children A and B. A has two children, and B has three. The testator leaves his entire estate to his grandchildren in equal shares in pari passu, each grandchild would inherit one fifth of the estate. If the testator left his entire estate to his 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.

The problem with a per capita in pari passu distribution in the example given is as follows. Assume A dies before B. On A's death a distribution could not be made to his or her children: they would have to await the death of B - on the assumption that B could have additional children, and thereby consequently all grandchildren (of both A and B) would be entitled to less than one fifth each.

In lending, bankruptcy and default

This term is also often used in the lending area and in bankruptcy 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".[4]

There have been cases where decisions were based on different interpretations of the term.[5][6]

In the European Union, as the result of the Greek government-debt crisis, a retroactive Collective action clause 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.[7]

See also

References

Notes

  1. ^ Briscoe, Simon; Fuller, Jane (2007). Harriman's Financial Dictionary: Over 2,600 Essential Financial Terms. p. 348. Ranking equally, meaning literally 'with equal step'. 
  2. ^ "Pari passu". Business Dictionary. 
  3. ^ Henry Campbell Black. "Black's Law Dictionary". 2nd Edition. West Publishing. Retrieved 10 December 2012. 
  4. ^ Smith, Mike. "Director’s Failure to Pay Taxes Ends in Disqualification". Retrieved 24 July 2014. 
  5. ^ Devi Sookun Stop Vulture Fund Lawsuits: A Handbook 2010 p34 2010 "The case succeeded because the court departed from the traditional meaning of the term pari passu. This section looks first at the original case of Elliott Associates v Republic of Peru."
  6. ^ Lloyd's maritime and commercial law quarterly 1983 "Obviously Lord Scott, in leaving out the preferential creditors, does not use the term pari passu in its multi-layered sense. Instead, his Lordship was referring to pari passu in its orthodox meaning."
  7. ^ Stevis, Matina; Burne, Katy. "Greek Legal Maneuvers Raise Fears of Euro-Zone Debt Fallout". Wall Street Journal. Retrieved 29 July 2014. 

Further reading

  • clause in sovereign debt instrumentspari passulaw.georgetown.edu the
  • An analysis of Section 334 of the Companies Act and its effect on proceedings for the enforcement of Judgments - Section 334 and the pari passu principle
This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 



Copyright © World Library Foundation. All rights reserved. eBooks from National Public Library are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.