In insolvency or equal treatment among creditors, what does the term in pari passu mean?

In insolvency or equal treatment among creditors, what does the term in pari passu mean?

• A. All creditors are paid equally proportional to their claim.
• B. Creditors are paid in the order they filed.
• C. Cred傳itors' claims are subordinated by rank.
• D. New creditors have priority.

Answer: (A)

Pari passu means creditors who share the same level of priority are treated equally in the payout; distributions are pro rata according to the size of each claimant’s claim. This ensures no one in that class is favored and everyone gets a share proportional to how large their claim is. For example, if three unsecured creditors have claims of 100, 80, and 20 and there are 60 available for distribution, the total claims are 200, so they receive 60*(100/200)=30, 60*(80/200)=24, and 60*(20/200)=6, respectively. The key idea is equal footing within the same rank, not giving priority by filing date, subordinating by rank, or preferring new creditors.

Pari passu means creditors who share the same level of priority are treated equally in the payout; distributions are pro rata according to the size of each claimant’s claim. This ensures no one in that class is favored and everyone gets a share proportional to how large their claim is. For example, if three unsecured creditors have claims of 100, 80, and 20 and there are 60 available for distribution, the total claims are 200, so they receive 60*(100/200)=30, 60*(80/200)=24, and 60*(20/200)=6, respectively. The key idea is equal footing within the same rank, not giving priority by filing date, subordinating by rank, or preferring new creditors.