Marshalling 3 Clause Samples

The 'Marshalling 3' clause governs the order in which a creditor may enforce its rights against multiple sources of security or assets provided by a debtor. In practice, this clause ensures that if a debtor has granted security interests over several assets to different creditors, the creditor seeking repayment must consider the interests of other creditors and may be required to pursue certain assets first, so as not to prejudice junior or subsequent creditors. The core function of this clause is to promote fairness among creditors by preventing one creditor from exhausting all available security to the detriment of others, thereby allocating risk and ensuring equitable treatment in the enforcement of security interests.