What is Pari Passu?

What is Pari Passu?

It is key that investors and lenders understand where they stand in the repayment queue should a company default. In this video Tim discusses the pari passu clause, a standard feature in debt agreements ensuring creditors are aware of when they will be repaid, in relation to other lenders.
Overview

The pari passu clause is a standard feature in debt agreements to ensure investors and lenders are aware of when they will be repaid, in relation to the other lenders, in the event the company becomes insolvent.

Key learning objectives:

  • Define pari passu

  • Understand the importance of the pari passu clause

  • Explain why the pari passu clause is different in a sovereign debt document

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