Pari passu Definition

GLOSSARY

What does Pari passu mean?

The right to be treated equally.

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Checklist of factors which may (and may not) fracture the class in a scheme of arrangement or restructuring plan

Checklist of factors which may (and may not) fracture the class in a scheme of arrangement or restructuring plan The below tables provide an overview of: (i) various factors that do not create separate classes (ie do not fracture the class) and (ii) various factors that have been considered to create separate classes (ie fracture the class) in Part 26 scheme and Part 26A restructuring plan cases. Judges have found that the caselaw relating to schemes is equally applicable to restructuring plans on many issues (see Re PizzaExpress (convening) and Re Virgin Atlantic), including class formation. However, the Court of Appeal in Adler confirms that cross-class cramdown (CCCD) in restructuring plans does require different considerations (though note that leave to appeal to the Supreme Court has been granted); see Practice Note: Cross-Class Cram Down under a Part 26A restructuring plan. As a word of caution, it is important to recognise that the class analysis is very fact-specific and it is possible that another judge, faced with a...

Intercreditor negotiation checklist—junior lenders

Intercreditor negotiation checklist—junior lenders The table below provides an overview of key points that a junior lender should check for when reviewing a straightforward intercreditor agreement involving senior secured lenders, junior secured lenders and unsecured subordinated creditors. It is aimed at users with limited experience of intercreditor agreements. The table focuses on the most important and common issues on a straightforward secured bilateral corporate loan transaction and does not aim to cover every possible negotiating point, nor does it cover points on specialist or more complicated transactions such as those in the leverage finance market. What is acceptable will be influenced by the type of transaction, the particular lender involved, as well as the relative negotiating strength of the parties. For information on intercreditor issues in specialist transactions, see Links to useful intercreditor materials below. Links to useful intercreditor materials Introductory materials For an introductory note on intercreditor agreements, including information on common provisions in intercreditor agreements, see Practice Note: Introductory guide to Intercreditor Agreements. Practice Note: How to draft...

The pari passu principle and collection remedies for the office-holder

The primary function of office-holders in both corporate and personal insolvency is to collect in the assets of the company or individual, realise and distribute them to the company's or individual's creditors in accordance with the statutory waterfall. For further information, see 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 receivershipPari passu distributionPari passu is a Latin phrase meaning 'with an equal step' or 'on equal footing'. For the purposes of insolvency it encompasses the principle of proportionality and is referred to when stating how creditors are to be treated as against each other. If they are ranked 'pari passu' then each creditor in the same class is paid equally and without preference to one another. If there is not enough money in an insolvency to pay creditors in full, they will be paid pro rata on a pari passu basis, so each will get a proportionate return. For example, all unsecured creditors (ie those creditors...

The difference between the anti-deprivation principle and the pari passu principle

This Practice Note gives a basic overview of the anti-deprivation principle (the ADP), and difference between the ADP and the pari passu principle (PPP).The anti-deprivation principleThe ADP is a principle that seeks to prevent parties from contracting out of the statutory regime for the collection, realisation and distribution of an insolvent estate. It prevents assets that should form part of an insolvent estate from being removed from that estate. In that regard, it protects the value of the estate from attempts to evade insolvency laws and operates to prevent an insolvency estate from being deprived of an asset that would otherwise be available for the benefit of its creditors. See Harrison, Re, ex p Jay (1880) 14 Ch D 19 (not reported by UU��ֱ��®).History of the anti-deprivation principleThe origins of the ADP are found in the old common law rules of bankruptcy. Though it was formerly referred to as a fraud on the bankruptcy laws, it is now known as the ‘anti-deprivation principle’.Case law on the anti-deprivation principleHaving become relatively...

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Short-form facility agreement (term loan): single company borrower—bilateral—unsecured

Short-form facility agreement (term loan): single company borrower—bilateral—unsecured Facility agreement This Agreement is made on [date] Parties 1 [insert name of Borrower], a company incorporated in England and Wales with registered number [insert company number] whose registered office is at [insert address] (the Borrower); and 2 [insert name of Lender], of [insert address] (the Lender). It is agreed as follows: 1 Definitions and interpretation 1.1 In this Agreement, unless otherwise provided: Business Day • means a day, other than a Saturday, Sunday or public holiday, on which banks are open for business in London; Commitment • means £[•] ([•] Sterling) minus any amount reduced or cancelled in accordance with this Agreement; Commitment Period • means the period commencing on the date of this Agreement to and including [•]; Default • means an event that with the giving of notice, lapse of time or other applicable condition would be an Event of Default under Clause 16; Drawdown • means [the OR a] utilisation of the...

Guarantee and indemnity—seller obligations—private M&A—asset purchase

Guarantee and indemnity—seller obligations—private M&A—asset purchase This Deed is made on [insert day and month] 20[insert year] Parties 1 [insert name of guarantor entity] [of OR a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at] [insert address] (the Guarantor); and 2 [insert name of the buyer] [of OR a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at] [insert address] (the Buyer). BACKGROUND: (A) The Buyer has agreed to purchase the Business as a going concern pursuant to the terms of the APA. (B) The Guarantor has agreed to guarantee the performance by the Seller of its obligations and liabilities under the APA and provide the Buyer with an indemnity in respect of such obligations of the Seller. The parties agree: 1 Definitions and interpretation 1.1 In this Deed, unless otherwise provided: APA • means the asset purchase agreement between the Buyer and the Seller made on or...

Dive into our 66 Precedents related to Pari passu

What are unitranche facilities?

What are unitranche facilities? What is a unitranche facility? Leveraged finance transactions are traditionally funded by a mixture of equity, senior debt, mezzanine debt and/or bonds. A unitranche facility is effectively a blend of the senior and mezzanine portion of the financing although it can sometimes covers part of the equity too. Therefore, instead of two facilities agreements, covenant packages, sets of security documents etc, only one is required. Unitranche facilities are more common on mid-market deals. What are the typical terms of a unitranche facility? Unitranche facilities differ from deal to deal but some typical features are: • the facility will be in the form of a term loan; if a revolving credit facility (RCF) is also required it will normally be documented in the same agreement and share the same security package • bullet repayment or possibly with a back ended amortisation schedule • higher margin than senior debt but lower margin than mezzanine debt; margin may be a mixture of cash and PIK...

When a company is in liquidation, do the directors or members retain control of the assets to the extent that they can assign them without the involvement of the insolvency practitioner appointed?

When a company is in liquidation, do the directors or members retain control of the assets to the extent that they can assign them without the involvement of the insolvency practitioner appointed? In answering this Q&A, we have referred to creditors’ voluntary winding up only. A liquidator is the officer appointed when a company goes into liquidation who has responsibility for collecting in all of the assets of the company and settling all claims against the company before putting it into dissolution (section 143 of the Insolvency Act 1986). The directors’ powers cease upon the appointment of a liquidator, unless the liquidator (in a members’ voluntary liquidation) or the liquidation committee or creditors (in a creditors voluntary

See the 27 Q&As about Pari passu

Restructuring Plan binds landlords despite prior express agreement to the contrary (UK Commercial Property Finance Holdings Ltd v Cine-UK Ltd and another)

Restructuring & Insolvency analysis: Four linked restructuring plans were sanctioned despite only being approved by two classes of creditors out of thirty-one classes of creditors. Two landlord creditors (‘Objecting Creditors’) had previously renegotiated existing and ongoing liabilities owed by the Plan Companies on the basis that the renegotiated liabilities would not be compromised further if the Plan Companies later sought Restructuring Plans. The Objecting Creditors did not appear and were not represented at the Convening Hearing but subsequently issued applications for injunctions which were dealt with at the Sanction Hearing at which they were represented. The Plans were approved. Written by Andrew Mace, barrister, Tanfield Chambers.

Tether held to be property in landmark judgment that considers the tracing of cryptoassets (D’Aloia v Persons Unknown Category A and others)

Dispute Resolution analysis: The claimant’s claim against a Thai-based crypto exchange was dismissed when he failed to establish that any of his misappropriated cryptocurrency had reached the relevant wallet ascribed to a customer of the exchange. The claims in unjust enrichment and for the imposition of a constructive trust on the exchange were dismissed in their entirety. The High Court concluded, for the first time following a contested trial, that the stablecoin, USD Tether, constituted property for the purposes of the law of England and Wales notwithstanding that it is neither a chose in action or a chose in possession. The court’s finding in this respect reflects prior decisions in respect of interim applications. The court also restated the position that separate regimes exist for tracing in equity and at common law. It remains the case that tracing through a mixed fund is only possible in support of equitable claims. Written by Darragh Connell and Eoin MacLachlan, barristers at Maitland Chambers.

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