Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Pari passu definition

What does Pari passu mean? Pari passu describes equal ranking and equal treatment in practice: claims or rights of the same class share rateably and obligations rank alongside each other without preference. Across insolvency, liquidation and administration in England & Wales, Scotland, Northern Ireland and Ireland, the pari passu principle requires unsecured creditors of the same class to receive distributions proportionately, subject to the statutory order of priority (for example, fixed charges, expenses, insolvency set-off and preferential debts). Legislation and case law in each jurisdiction reflect and enforce this principle, and parties cannot contract out of it so as to disturb the statutory distribution waterfall. In corporate...

Pari passu, anti-deprivation and British Eagle: office-holder remedies and avoidance actions in corporate and personal insolvency (England and Wales)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

In both corporate and personal Insolvency, office-holders chiefly gather the company’s or individual’s assets, realise them and distribute the proceeds to creditors in accordance with the statutory Waterfall.

For more detail, consult the following Practice Notes:

Waterfall of payments—a comparative guide
Waterfall of payments in administration
Waterfall of payments in liquidation
Waterfall of payments in bankruptcy
Waterfall of payments in administrative receivership

Pari passu distribution

Pari passu, a Latin term, translates as ‘with an equal step’ or ‘on equal footing’. In insolvency, it captures the principle of proportionality and is used to describe how creditors are treated relative to one another.

Where claims rank ‘pari passu’, all creditors within the same class are paid alike, with no one preferred. If funds are insufficient to satisfy debts in full, distributions are made pro rata on a pari passu basis, so each receives a proportionate return. For instance, unsecured creditors (ie creditors in the same category) might receive 10p for every pound owed...

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Web page updated on 21/05/2026

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