Pari Passu Loan
A pari passu loan is a single loan (or loan exposure) divided into components where each component shares the same last-dollar risk and receives pro rata treatment. Components may be held by different parties, and in a default scenario, net proceeds are generally distributed on a prorated basis.
- Where it applies
- Generally, not specific to New York
- When it comes up
- Structuring; syndication/distribution; servicing
- Property types
- Commercial and multifamily finance; securitized and balance-sheet structures
In practice
Pari passu structures raise coordination and voting mechanics questions - governance is a material economic term.
Related terms
Commercial Lending
- Acceleration Clause
- Bridge Loan
- Credit Facility
- Debt Service Coverage Ratio (DSCR)
- Net Operating Income (NOI)
- SBA 504 Loan Program
General information, not legal, tax or financial advice.