(a) Equality Subject to Preferences and Security.
(1) If the estate, either in this state or as a whole, is insolvent, it shall be disposed of so that, as far as possible, each creditor whose claim has been allowed, either in this state or elsewhere, shall receive an equal proportion of his or her claim, subject to preferences and priorities and to any security which a creditor has as to particular assets.
(2) If a preference or priority is allowed in another jurisdiction but not in this state, the creditor so benefited shall receive dividends from local assets only upon the balance of his or her claim after deducting the amount of the benefit.
(3) The validity and effect of any security held in this state shall be determined by the law of this state, but a secured creditor who has not released or surrendered his or her security shall be entitled only to a proportion computed upon the balance due after the value of all security not exempt from the claims of unsecured creditors is determined and credited upon the claim secured by it.
(b) Procedure.
(1) In case of insolvency and if local assets permit, each claim allowed in this state shall be paid its proportion, and any balance of assets shall be disposed of in accordance with § 28-42-109.
(2) If local assets are not sufficient to pay all claims allowed in this state the full amount to which they are entitled under this section, local assets shall be marshaled so that each claim allowed in this state shall be paid its proportion as far as possible, after taking into account all dividends on claims allowed in this state from assets in other jurisdictions.
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