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Pari Passu


A Latin phrase that means “on equal footing”, “with equal pace”, or “with equal step”. Pari passu clauses are very usual in lending-related agreements and bankruptcy proceedings as it deals with the ranking of claims and is effected in lending contracts to ensure that the claims of creditors will not rank below those of other unsubordinated debts. A typical pari passu clause may stipulate that “all the obligations and liabilities of the borrower will rank either pari passu in right of payment with, or senior to all other unsubordinated debts of the borrower”.



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