You are here

Customized Distribution, LLC v. Coastal Bank & Trust Co. (In re Lee’s Famous Recipes, Inc.), AP 11-5482, Doc. #58

Order granting complaint seeking to compel marshaling.  Junior creditor with lien against certain real estate sought to compel senior creditor with lien against the same real estate and an additional collateral source, a revenue stream that had been partly collected, to satisfy its claim from the collateral in which junior creditor did not have a lien.  Marshaling requires that: 1) the creditors are creditors of the same debtor, 2) there are two funds belonging to that debtor, and 3) one of the creditors has the right to resort to both funds.  In addition the Court must consider whether marshaling will impair the senior lienholder’s right to complete satisfaction or cause injustice to third parties.  The Court determined that under Georgia law the senior creditor’s claim must be satisfied proportionally from each fund and that the senior creditor, as well as the creditors with liens in the non-real estate collateral, were sufficiently over secured so that marshaling did not impair the senior creditor’s right to complete satisfaction and was not unfair to the other junior lien holders.

File: 
Date: 
01/24/2013