The Pari Passu Principle in Australian Corporate Insolvency Law

14 Pages Posted: 15 Sep 2021

See all articles by Dr Sara Golru

Dr Sara Golru

The University of Sydney, Faculty of Law

Date Written: September 2018

Abstract

One of the most controversial issues in modern insolvency law is the question of how to distribute an insolvent’s assets among its creditors. The pari passu principle attempts to resolve this issue by ensuring that all creditors are treated equally, ‘pari passu’, and share in insolvency assets pro rata depending on their pre-insolvency entitlements or the sums owed to them. This article analyses how this principle has been affected by its numerous and broad exceptions, in particular security, priorities, set-off, netting, debt subordination and members’ debts. It is argued that there are significant policy reasons justifying the continued existence of the exceptions to the principle with little to no modification, as the current distribution regime maximises the fairness and efficiency of the insolvency process.

Keywords: pari passu

Suggested Citation

Golru, Dr Sara, The Pari Passu Principle in Australian Corporate Insolvency Law (September 2018). Available at SSRN: https://ssrn.com/abstract=3905618 or http://dx.doi.org/10.2139/ssrn.3905618

Dr Sara Golru (Contact Author)

The University of Sydney, Faculty of Law ( email )

Faculty of Law Building, F10
Sydney, NSW
Australia

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