Doctrine of marshalling

Doctrine of marshalling

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.


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