pro rata

A payment or loss is shared pro rata when each person bears or receives an amount proportionate to his share, interest or claim. If an estate worth five lakhs owes ten lakhs to its creditors of the same class, each creditor is paid fifty paise in the rupee pro rata.

The phrase is common in insolvency, partnership accounts, insurance (pro rata contribution among co-insurers), apportionment of rent or salary for part of a period, and distribution of dividends. It is often paired with pari passu: claims ranking equally are paid pro rata. It should not be confused with pro tanto (to that extent).

Example

The liquidator paid the unsecured creditors pro rata because the assets were insufficient to pay them in full.

See also

pari passu · pro tanto · insolvency · winding up

Read more in the study notes

• Punishments under the BNS, including community service (Bharatiya Nyaya Sanhita)
• Burden of proof: exceptions, special knowledge and statutory shifts (Bharatiya Sakshya Adhiniyam)
• The liquidator, preferential payments and insolvency under the IBC (Company Law)
• Performance of contracts (Contract I)
• Canons of taxation, a good tax system, and direct and indirect taxes (Economic Theory and Public Finance)
• Muslim law of inheritance: Sunni and Shia (Family Law II - Mohammedan Law)