Marshalling — an opportunity for junior creditors
Marshalling is an equitable remedy for achieving fairness between two or more secured creditors of the same debtor. Where the first creditor enforces its security against assets over which both hold security but not against assets over which it alone holds security, the second creditor may be entitled to use the assets over which the former has security. Alternatively, the doctrine may require the former creditor to satisfy itself out of the asset over which the latter has no security.
In the first case, the Serious Organised Crime Agency (SOCA) brought proceedings to seize properties owned by Mr and Mrs Szepietowski on the basis that they were the proceeds of crime (the ‘SOCA proceedings’). Some of the properties, including the family home, were registered in the name of Mrs Szepietowski and the Royal Bank of Scotland had a charge against them (and other properties) for a debt of £3.225m (the ‘RBS charge’). The SOCA proceedings settled on terms that included a deeming provision that the Szepietowskis’ home was not a ‘recoverable property’ and pursuant to which Mrs Szepietowski granted a charge to SOCA over other properties (the ‘SOCA charge’). The SOCA charge contained various provisions, including a statement that Mrs Szepietowski did not personally owe any money to SOCA, and it was registered as a second charge over properties (excluding the marital home) that were already subject to the RBS charge. The intention behind the settlement arrangement was that there would be sufficient proceeds of sale of the other properties to satisfy both the RBS charge and the SOCA charge. However, proceeds were ultimately less than expected, leaving SOCA with only a nominal sum once the RBS charge had been satisfied.
SOCA therefore brought an action to invoke the remedy of marshalling in respect of the Szepietowskis’ home. Mrs Szepietowski argued, in defence to that claim, that SOCA could not rely on marshalling because there was no underlying debt owed by her to SOC…
Click on the link below to read the rest of the Walker Morris briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Walker Morris
News from The Lawyer
Briefings from Walker Morris
The Court of Justice of the European Union has ruled that the one-off provision of incorrect information to a consumer is a ‘misleading commercial practice’.
From 1 October this year, landlords who let English properties will have to be wary of a change to the law introduced by the Deregulation Act 2015.
Analysis from The Lawyer
Which firms are cutting it in this era of slimline rosters, and who are the GC new brooms making clean sweeps? The Lawyer can reveal all
The law school war shows no signs of ending. But we have, perhaps, reached the end of the beginning.