Ray v. American National Bank & Trust Co. (In Re Payne & Haddock, Inc.)

MEMORANDUM

RALPH H. KELLEY, Chief Judge.

This adversary proceeding raises a complicated question about the right of a junior lienholder to require the holder of a senior lien to marshal its collateral.

The defendant, American National Bank, made a loan to the debtor secured by equipment and accounts receivable. The debt currently is $25,540.66. The bank made the debtor a second loan secured only by accounts receivable. The second secured debt now totals $149,477.69.

The first security agreement did not include an “other debts” provision that would have made the equipment and accounts receivable…