Doctrine of Marshalling
Encyclopedia
Marshalling is a common law
equity concept applied in the context of lending. Suppose there are two creditors and one borrower. Creditor A has the right to resort to two pieces of security interest
of the borrower and creditor B only has access to only one piece of security. Also suppose the only piece of security that B can enforce is also one of the two pieces of security of A. In such a case, a court would order A to be paid out of the security against which B has no claim. As a result, assets would be left to B as much as possible.
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
equity concept applied in the context of lending. Suppose there are two creditors and one borrower. Creditor A has the right to resort to two pieces of security interest
Security interest
A security interest is a property interest created by agreement or by operation of law over assets to secure the performance of an obligation, usually the payment of a debt. It gives the beneficiary of the security interest certain preferential rights in the disposition of secured assets...
of the borrower and creditor B only has access to only one piece of security. Also suppose the only piece of security that B can enforce is also one of the two pieces of security of A. In such a case, a court would order A to be paid out of the security against which B has no claim. As a result, assets would be left to B as much as possible.