Sequential Pay Event Clause Samples

A Sequential Pay Event clause establishes the order in which payments are distributed among different classes of investors or creditors, typically in structured finance or securitization transactions. Under this clause, payments such as principal or interest are made to one class or tranche in full before any payments are made to the next class in the sequence. For example, senior noteholders may receive all scheduled payments before any funds are allocated to junior noteholders. The core function of this clause is to prioritize payment streams, thereby managing risk and providing clarity on how cash flows are allocated among stakeholders.