Marshalling

Marshalling definition

What does Marshalling mean?

Where two or more creditors are owed money by the same debtor, and one creditor has more than one security whereas the other has resort to only one. If the creditor with more than one security realises its security in respect of the common property, leaving a shortfall to the creditor with only one security, equity empowers the court to marshal the securities so that the creditor with only one security can enforce its outstanding debt against the property over which it has no security rather than falling back on the status of an unsecured creditor. This gives the creditor with only one security greater protection and increases the prospect that it will be repaid. It can be a useful doctrine for a creditor to rely upon therefore.

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