pari passu clause

A pari passu clause is a provision in a loan agreement or bond that means all lenders or investors holding similar debts are treated equally and share in repayment on equal footing. If a company or borrower pays back some debt, all pari passu creditors get their fair and proportional share, without any one having priority over another. This ensures fairness among creditors, preventing any single creditor from having an advantage in recovering funds if the borrower faces financial difficulties.