RANDY D. DOUB, Bankruptcy Judge.
Pending before the Court is the Motion of ERGS II, L.L.C. Regarding Tabulation of its Unsecured Class 7 Ballot (the "Motion") filed by ERGS II, L.L.C. ("ERGS") on September 21, 2012 and the Debtor's Response to Motion of ERGS II, L.L.C. Regarding the Tabulation of its Unsecured Class 7 Ballot (the "Response") filed by Lichtin/Wade, L.L.C. (the "Debtor") on October 15, 2012. The Court conducted a hearing on the Motion and Response in Wilson, North Carolina on December 20, 2012.
The Debtor filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") on February 2, 2012. The Debtor owns two office buildings known as Wade I and Wade II, plus approximately twelve (12) acres of vacant land upon which three (3) additional office buildings may be constructed, referred to as Wade III, Wade IV, and Wade V (the "Property"). On the petition date, the Property was encumbered by several deeds of trust and corresponding assignments of rent held by Branch Banking & Trust Company ("BB & T"), securing four (4) promissory notes with unpaid principal and interest totaling $39,052,661.91. On March 27, 2012, BB & T sold the underlying indebtedness to ERGS. The Debtor and ERGS filed a stipulation for the purposes of confirmation of the Debtor's Plan of Reorganization that the Property should be valued at $38,390,000.00 on April 24, 2012. ERGS filed proof of claim, Claim No. 10, in the amount of $39,236,631.03 on May 2, 2012. The Debtor filed an objection to ERGS's proof of claim on May 29, 2012 because in
Shortly after the petition date, the Debtor filed an emergency motion to use cash collateral pursuant to 11 U.S.C. § 363. On February 24, 2012, the Court entered the Interim Order Authorizing Debtor's Use of Cash Collateral Pursuant to 11 U.S.C. § 363 and Turnover of Certain Rental Proceeds, which allowed the Debtor to use rental payments that constituted cash collateral of ERGS's predecessor, BB & T, according to a set budget.
Adequate Protection Payments February 2012 $ 50,000.00 March 2012 $ 153,244.33 April 2012 $ 159,958.32 May 2012 $ 160,321.20 June 2012 $ 160,321.20 July 2012 $ 165,665.67 August 2012 $ 175,665.67 September 2012 $ 170,321.20
October 2012 $ 175,665.67 Total Adequate Protection Payments $1,371,163.26
The Debtor filed the Plan of Reorganization and Disclosure Statement on March 26, 2012 but withdrew the filings on April 11, 2012. Subsequently, the Debtor filed a new Chapter 11 Plan of Reorganization and Disclosure Statement on April 11, 2012.
Disclosure Statement 5. In the First Amended Disclosure Statement filed by the Debtor on July 19, 2012, the Debtor includes the following language in reference to the treatment of ERGS's claim:
First Am. Disclosure Statement 14.
ERGS asserts that by including this language in the disclosure statements, the Debtor "suggests that post-petition adequate protection payments ... should be applied to reduce the deficiency claim held by ERGS." Mot. 5-6. In the Motion, ERGS argues the Court no longer has
Further, ERGS argues the Debtor has not filed a pleading to allege or show that cause exists for reconsideration of the Claim Allowance Order pursuant to Federal Rule of Civil Procedure 60(b), made applicable through Federal Rule of Bankruptcy Procedure 9024. Additionally, ERGS asserts the Debtor is barred by the doctrines of res judicata, law of the case, and judicial estoppel from seeking further reduction in the allowed amount of ERGS's secured and unsecured claims.
In the alternative, should the Court determine it is appropriate to hear the issue of the application of the adequate protection payments, ERGS argues the payments should not reduce the unsecured deficiency claim, but should be applied to the secured claim instead. ERGS claims the majority of courts have adopted the approach of crediting payments against the secured claim as opposed to the unsecured claim. Mot. 21. Alternatively, if the adequate protection payments are not applied to ERGS's secured claim, then the Court should find the adequate protection payments were in compensation for the overall diminution in value of ERGS's collateral and should be applied to ERGS's super-priority adequate protection claim. Mot. 26. Finally, in a third alternative, ERGS argues the adequate protection payments should be applied to post-petition interest, resulting in no change to the principal amount of the allowed secured claim. Id.
The Debtor counters by explaining that the issue of the application of the adequate protection payments is not an issue on appeal, rather it has never been decided. In the objection to ERGS's claim, the Debtor objected to the balance of the claim being overstated in the amount of $179,969.12. The Debtor asserts nothing in the objection to claim addresses the application of the adequate protection payments. Resp. 3. The issue was neither briefed nor addressed by either party at the hearing. Id. The issue of whether or not ERGS is entitled to charge retroactive default interest as part of the pre-petition claim is separate and distinct from the application of adequate protection payments made post-petition. Id. As the objection to claim neither addressed the same issue or claim, the doctrines of res judicata, law of the case, and judicial estoppel do not prevent the Court from hearing the present matter. The Debtor recognizes there is a line of cases that find post-petition payments should be applied to the secured portion of a claim. However, the Debtor asserts that 11 U.S.C. § 552(b) extends ERGS and its predecessor's pre-petition lien to rental income, which essentially allows the secured portion of an undersecured creditor's collateral to increase as rental income is collected by a debtor. According to the Debtor, the net effect of the increase in a creditor's collateral is that payments reduce the unsecured portion of a claim first. Resp. 9.
In the Motion, ERGS argues the Court has no jurisdiction over the present issue because the filing of a notice of appeal
In support of its argument, ERGS contends, "[i]t is clear that the pending appeal and the Debtor's extraordinary relief deal with the same issue — the allowed amount of the ERGS Claim." Mot. 10. The Claim Allowance Order stated the Debtor "objected to ERGS's inclusion of $172,969.12" in ERGS's proof of claim, which ERGS stated "include[d] default interest from December 16, 2011 through January 29, 2012." In re Lichtin/Wade, L.L. C., No. 12-00845-8-RDD, 2012 WL 3260287, at *1 (Bankr.E.D.N.C. Aug. 8, 2012). The Court sustained the Debtor's objection to claim, "to the extent the Proof of Claim filed by ERGS II, L.L.C. [sought] to recover retroactive default interest from the date of maturity through January 29, 2012." Id. at *5. The Court found "ERGS II, L.L.C.'s claim in the amount of $39,236,631.03 shall be reduced to $39,063.661.91. Further, the claim of ERGS II, L.L.C. shall be treated as a secured claim in the amount of $38,390,000.00, and an unsecured claim in the amount of $673,661.91." Id. Additionally, in determining that ERGS was entitled to an unsecured claim in the amount of $673,661.91, the Court specifically addressed the language in the parties' agreement and whether it provided for interest at the default rate. The Court found that while the agreement executed by the Debtor did provide for a default rate of interest, the note holder must first, "at its option," declare the note in default before the default rate is effective. Id. Because BB & T, the predecessor to ERGS, "chose, `at its option' to wait until January 30, 2012 to declare the Secured Notes in default," ERGS was not entitled to interest at the default rate prior to January 30, 2012. Id.
The Court did not address, and the parties did not raise, the issue of the application of the adequate protection payments in the Claim Allowance Order. ERGS argues that because resolution of the present issue will affect payment of the secured or unsecured claims, it ultimately concerns the secured and unsecured claim amounts, which are the subject of the August 16, 2012 notice of appeal. However, the Court finds the subject of the Claim Allowance Order and the present issue, the application of the Debtor's adequate protection payments, are separate and distinct. The issue on appeal before the district court is the objection to ERGS's claim and whether ERGS is entitled to interest at the default rate on its claim prior to January 30, 2012.
For this reason, the purpose of the rule divesting trial courts of jurisdiction on matters on appeal is not frustrated in this instance. See Whispering Pines Estates, Inc., 369 B.R. at 757. On appeal the district court may still affirm or reverse the Claim Allowance Order and such determination will not have bearing on the manner in which either claim is paid, only the ultimate amount of the claim. Furthermore, failure to consider the issue will hamper this Court's ability to administer the case in a timely manner. Id. at 758. The parties have litigated numerous issues in this bankruptcy proceeding and are approaching confirmation. Declining to hear the present issue before confirmation would frustrate the Court's ability to determine whether the proposed plan of reorganization complies with the requirements of 11 U.S.C. § 1129, notably, whether the plan is proposed in good faith, whether the plan is feasible, and whether at least one class of impaired claims has accepted the plan.
Federal courts apply the forum state's law on res judicata. Fowler v. Fowler (In re Fowler), 312 B.R. 287, 292 (Bankr.E.D.N.C.2004). In North Carolina, in order to claim the doctrine of res judicata, a party must meet the following elements: "(1) a final judgment on the merits in an earlier suit, (2) an identity of the causes of action in both the earlier and the later suit, and (3) an identity of the parties or their privies in the two suits." Id. (quoting Stafford v. Bladen County, 163 N.C. App. 149, 151, 592 S.E.2d 711, 713 (2004)). "An `indispensable requirement of res judicata ... is actual litigation of the issue.'" Id. (quoting M & M Transmissions, Inc. v. Raynor (In re Raynor), 922 F.2d 1146, 1149 (4th Cir.1991)).
ERGS contends res judicata bars the Court from hearing the present matter because there is identity between the parties and claims involved in the Claim Allowance Order, which was a final judgment on the merits. These elements having been met, ERGS concludes that "[i]f the Debtor intended to challenge and seek reduction in the allowed amount of ERGS's unsecured claim based on the application of the adequate protection payments ... it was obligated to litigate that issue at the July 10, 2012 hearing on the Claim Objection." Mot. 15. As previously addressed,
Neither is the Court barred from addressing the application of the adequate protection payments by law of the case. "Under the law of the case doctrine, a court has the discretion to preclude a party from re-litigating an issue previously decided in the same case." Moser v. MCC Outdoor, L.L.C., 630 F.Supp.2d 614, 626 (M.D.N.C.2009) (footnote omitted). ERGS contends that because the Court entered the Claim Allowance order it is now precluded from entering judgment on the present issue, as the "Court's prior ruling is law of the case and prevents the Debtor's attempt to re-litigate this issue." Mot. 16. Again, ERGS's argument presupposes that the issue of when the default rate of interest is triggered and the application of the adequate protection payments are one in the same. However, the Court neither heard arguments on nor considered the impact of the adequate protection payments in considering the Claim Allowance Order. Thus, while the application of adequate protection payments has an effect on the unsecured balance outstanding, the two are separate and distinct issues and the Claim Allowance Order is not law of the case as to the present issue.
Furthermore, even if the Claim Allowance Order constituted law of the case, the Fourth Circuit notes that the "law of the case doctrine is not an `inexorable command' but rather a prudent judicial response to the public policy favoring an end to litigation." Sejman v. Warner-Lambert Co. Inc., 845 F.2d 66, 68 (4th Cir.1988) (quoting White v. Murtha, 377 F.2d 428, 431 (5th Cir.1967)). Additionally, while "the doctrine applies both to questions actually decided as well as to those decided by `necessary implication,' it does not reach `questions that might have been decided but were not.'" Id. at 69 (quoting Carpa, Inc. v. Ward Foods, Inc., 567 F.2d 1316, 1320 (5th Cir.1978)). Thus, even if the Claim Allowance Order created law of the case, it would not apply to the issue of adequate protection payments as they were not previously addressed by the Court.
Finally, ERGS asserts the doctrine of judicial estoppel prevents the Debtor from seeking further reduction of ERGS's allowed claim amount. The doctrine of judicial estoppel requires four elements: "(1) the party to be estopped must be advancing an assertion that is inconsistent with a position taken during previous litigation; (2) the position must be one of fact, rather than law or legal theory; (3) the prior position must have been accepted by the court in the first proceeding; and (4) the party to be estopped must have acted intentionally, not inadvertently." Havird Oil Co., Inc. v. Marathon Oil Co., Inc., 149 F.3d 283, 292 (4th Cir.1998). The Fourth Circuit has expanded this last factor to require that a party must have "intentionally misled the court to gain unfair advantage." Zinkand v. Brown, 478 F.3d 634, 638 (4th Cir.2007) (quoting Tenneco Chem., Inc. v. William T. Burnett & Co., 691 F.2d 658, 665 (4th Cir.1982)).
Finally, the Court finds no facts supporting an allegation that the Debtor intentionally misled the Court for its own benefit. The Court conducted hearings on the use of cash collateral in the form of post-petition rents and entered orders containing the adequate protection provisions. The purpose of the orders was to provide ERGS with some form of payment until the Debtor reached confirmation and began performing under its plan. The Court and ERGS were both well aware that the Debtor had been making these payments, which would have some effect on the amount of ERGS's claim. Therefore, upon a finding of no bad faith on the part of the Debtor, the Debtor is not judicially estopped from seeking a determination on the application of the adequate protection payments.
Pursuant to 11 U.S.C. § 506(a), an allowed claim of a creditor secured by a lien on property,
11 U.S.C. § 506(a). Put more simply, "an unsecured creditor will have a secured claim equal to the value of the collateral and an unsecured claim for the balance." In re South Side House, L.L.C., 474 B.R. 391, 412-13 (Bankr.E.D.N.Y.2012). In the Claim Allowance Order, the Court determined that ERGS is allowed a secured claim in the amount of $38,390,000.00 and an unsecured claim in the amount of $673,661.91. The issue now before the Court is whether the adequate protection payments, required by the interim cash collateral orders, should be applied to ERGS's secured claim, unsecured claim, or
Further, § 506(b) "permits an oversecured creditor to receive post-petition interest and other charges, and generally prohibits an undersecured creditor from receiving these benefits. Stated another way, under Section 506(b) and [United Savings Ass'n of Tex. v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 374, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988)], an undersecured creditor may not receive payment in excess of its original claim." In re South Side House, L.L.C., 474 B.R. 391, 413 (Bankr.E.D.N.Y.2012) (citation omitted). Therefore, the adequate protection payments made by the Debtor to ERGS must be applied to ERGS's claim in some manner as "payments made by a debtor to a creditor should be applied to the claim, regardless of the source of the payments." In re Oaks Partners, Ltd., 135 B.R. 440, 449 (Bankr.N.D.Ga.1991).
As Collier's on Bankruptcy explains,
3 Collier on Bankruptcy (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2012) ¶ 361.03[2][a] (footnotes omitted). Collier's continues, explaining some courts adopt the "subtraction" theory, which applies payments made under an assignment of rents as adequate protection to the portion of the claim secured by real estate. Id.; First Fed. Bank of Ca. v. Weinstein (In re Weinstein), 227 B.R. 284 (9th Cir. BAP 1998); Confederation of Life Ins. Co. v. Beau Rivage Ltd., 126 B.R. 632 (N.D.Ga.1991); In re Kalian, 169 B.R. 503 (Bankr.D.R.I.1994); In re IPC Atlanta Ltd. P'ship., 142 B.R. 547 (Bankr.N.D.Ga. 1992); In re Oaks Partners, Ltd., 135 B.R. 440 (Bankr.N.D.Ga.1991); In re Reddington/Sunarrow Ltd. P'ship., 119 B.R. 809 (Bankr.D.N.M.1990).
Other courts, in light of 11 U.S.C. § 552(b), follow the "addition" view, which provides that payments from assigned rents should reduce a creditor's unsecured deficiency claim by satisfying the portion of the claim that is secured by the assignment of the rents.
The benefit of § 552(b) to a creditor who holds a valid security interest in rent is that it allows the unsecured portion of a creditors claim to receive distributions ahead of other unsecured creditors. United Savings Ass'n of Tex. v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 374, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988) ("Section 552(b) therefore makes possession of a perfected security interest in postpetition rents ... a condition of having [the rents] applied to satisfying the claim of the secured creditor ahead of the claims of [other] unsecured creditors."); In re 354 East 66th St. Realty Corp., 177 B.R. 776, 781 (Bankr.E.D.N.Y.1995) (One of the rights granted to creditors with an assignment of rent is "the right to apply the net post-petition rents to [a creditor's] claim to the exclusion of the other creditors."). While this contravenes the traditional priority scheme of the Bankruptcy Code, it is a right conferred by § 552(b).
Therefore, this Court is tasked with determining the effect of periodic payments to an undersecured creditor with a post-petition security interest in the proceeds or rents derived from the creditor's collateral pursuant to § 552(b). The issue has not been raised before this Court before, largely because most debtors would prefer any post-petition payments be credited to the secured portion of a creditor's claim, thereby reducing future plan obligations. Additionally, it is rare for such payments to completely eliminate an unsecured deficiency claim as could happen in this case.
The "subtraction" cases treat the payments as offsetting any decline in the value of the real property collateral, while the payment of the rents protects the creditor's overall interest in the real property and the rents combined.
As explained in In re South Side House, L.L.C., which the Debtor argues is instructive, the "addition" cases recognize the separate security interest in rents allowed by § 552(b). In re South Side House, L.L.C., 474 B.R. 391 (Bankr.E.D.N.Y. 2012); see also In re 354 East 66th Street Realty Corp., 177 B.R. 776, 783 (Bankr. E.D.N.Y.1995) (One of the rights granted to creditors with an assignment of rent is "the right to apply the net post-petition rents to [a creditor's] claim to the exclusion of the other creditors."); In re Gramercy Twins Assocs., 187 B.R. 112, 121-22 (Bankr.S.D.N.Y.1995) (reducing the unsecured deficiency claim is not a violation of § 506 because the purpose of cash payments is to protect a perfected security interest in the rents). The facts in South Side House are analogous to the present case. Both cases involved single asset real estate debtors.
Id. at 415. The court continued, explaining that the
Id. at 416 (quoting In re Gramercy Twins Assocs., 187 B.R. at 122 n. 23). Therefore, a "[d]ebtor's payments from the [r]ents should be applied first to the unsecured portion of the [l]ender's claim until it is reduced to zero, and then to the post-petition interest, fees, costs, and charges allowed under Section 506(b), and finally to principal." Id. at 420.
The court in South Side House also cites Collier's interpretation of how rents should be distributed, stating that
3 Collier on Bankruptcy (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2012) ¶ 361.03[2][a] (footnotes omitted).
In light of the conflicting views in the "addition" and "subtraction" cases, the Court finds that § 552(b) creates a separate security interest in the rent derived from the Property, which is distinct from the value of the Property itself. Because the rents increase during the pendency of the bankruptcy case, correspondingly, the value of the total collateral, over and above the value of the Property, also increases. When this occurs, the undersecured portion of ERGS's claim must then decrease, because the total amount of collateral is increasing. It is not until the value of the collateral increases to the point that ERGS no longer has an unsecured claim that ERGS will be entitled to post-petition interest and fees pursuant to § 506(b). This Court finds South Side House and the other "addition" cases, correctly recognize the existence of the § 552(b) security interest in post-petition rents and properly reduce the unsecured claim by the amount of the rent collateral held by the Debtor. South Side House, L.L.C., 474 B.R. at 421. This treatment is in accord with Timbers,
ERGS asserts that treatment under the "subtraction" cases is the only appropriate method to apply the adequate protection payments. ERGS argues that when a secured creditor receives back a portion of its own collateral, the amount of its secured claim reduces. This methodology fails to account for the increase in ERGS's collateral based on the amount of rent collected and ignores the effect of § 552(b) and the assignment of rents. Further, the concern the "subtraction" cases share over allowing an undersecured creditor to collect post-petition interest and fees in violation of § 506(b) is unfounded. Under the "addition" method, post-petition interest and fees are not awarded to an undersecured creditor until its unsecured deficiency claim reaches zero, at which point, as the collateral continues to grow, the creditor will become fully or oversecured. South Side House, L.L.C., 474 B.R. at 420.
Alternatively, if the Court does not find the adequate protection payments reduce the secured claim, then ERGS asserts the Court should find the payments compensate it for the diminution in value of ERGS's collateral and should be applied to ERGS' super-priority adequate protection claim. ERGS argues that the Debtor's use of cash collateral eroded the overall value of ERGS's collateral. Because the overall value of the collateral diminished, ERGS asserts it was entitled to adequate protection through payment of a portion of the rents, especially where there is no other unencumbered collateral to protect its interests. ERGS cites In re Flagler-at-First Assocs., Ltd. in support of the position that a secured creditor has a right to receive a portion of the rent from its real property collateral as adequate protection against a debtor's erosion of the value of the cash collateral. In re Flagler-at-First Assocs., Ltd., 114 B.R. 297, 303 (Bankr.S.D.Fla.1990). In Flagler-at-First Associates, the debtor argued the post-petition payments to the creditor should be reduced from the secured claim. The court explained that accepting the debtor's position "would require the conclusion that [the creditor] has no interest in the post-petition rental revenues generated by the [real property collateral]." Id. at 299. The result, according to the Flagler court, "is essentially a `wash' in that the additional collateral value represented by the excess rents is to be setoff by the fact that [the creditor] has already received them during the course of the" case. Id. at 302. Based on Flagler, ERGS argues "there should be no reduction in any portion of the ERGS Claim as a result of the post-petition adequate protection payments." Mot. 26. This Court can see no logical reason to deny crediting any portion of ERGS's claims to the extent of the adequate
Further, courts have held it is possible for a secured creditor with an assignment of rent to be adequately protected by the net rental proceeds after payment of "necessary expenses of maintaining the rental project." Travelers Ins. Co. v. River Oaks Ltd. P'ship (In re River Oaks Ltd. P'ship), 166 B.R. 94, 98 (Bankr.E.D.Mich.1994). River Oaks Limited Partnership explains one line of cases holds that a creditor can be "`adequately protected' as long as the rental income is used only for the necessary expenses of maintaining the rental project." Id. (citing In re Forest Ridge, II, Ltd. P'ship, 116 B.R. 937, 948 (Bankr. W.D.N.C.1990)). Other cases hold the cash collateral of an undersecured creditor may be used pursuant to 11 U.S.C. § 506(c), which provides an exception for the reasonable, necessary costs and expenses of preserving property. Id. (citing In re KNM Roswell Ltd. P'ship, 126 B.R. 548, 557 (Bankr.N.D.Ill.1991)); 11 U.S.C. § 506(c). The Final Order (A) Authorizing Debtor's Use of Cash Collateral Pursuant to 11 U.S.C. § 363, and (B) Granting Adequate Protection Pursuant to Sections 361, 363, and 364 of the Bankruptcy Code, provides the Debtor is authorized to use the cash collateral for "post-petition reasonable, necessary costs and expenses of preserving the Debtor's property." In re Lichtin/Wade, L.L.C., No. 12-00845-8-RDD, at 8 (Bankr.E.D.N.C. May 18, 2012). Therefore, the Court is not convinced that ERGS is entitled to a super-priority adequate protection claim for the diminution of its cash collateral because the Debtor was authorized to use the cash collateral only for reasonable, necessary costs and expenses and ERGS received monthly cash payments and replacement liens in the rent.
Finally, as a third alternative, ERGS argues the adequate protection payments should be applied to post-petition interest, resulting in no change to the principal amount of the allowed claim. ERGS cites In re Columbia Office Associates, L.P. and In re Vermont Investment, L.P. for the proposition that that the total amount of interest and costs accruing post-petition will equal or exceed the amount of post-petition payments, creating a "wash," by which there was no reduction in the principal amount of the secured creditor's claim. In re Columbia Office Assocs. Ltd. P'ship, 175 B.R. 199, 204 (Bankr.D.Md.1994); In re Vermont Inv. L.P., 142 B.R. 571, 573 (Bankr.D.C.1992). However, the court in Columbia Office Associates recognizes that
In re Columbia Office Assocs. Ltd. P'ship, 175 B.R. at 204. But allowing an undersecured creditor to receive payment for post-petition interest and fees clearly violates § 506(b). The property value must be "greater than the amount of" a creditor's claim. 11 U.S.C. § 506(b). Therefore, as held by the majority of courts, adding the amount of the adequate protection payments to the secured portion of the claim and correspondingly reducing the unsecured portion of the claim is the only appropriate mechanism to comply with § 506(b). Only when a creditor's unsecured claim equals zero and an equity cushion exists, is it then appropriate to award a creditor post-petition interest and fees. Timbers, 484 U.S. at 372-74, 108 S.Ct. 626 (Since § 506(b) "permits postpetition interest to be paid only out of the `security cushion,' the undersecured creditor, who has no such cushion, falls within the general rule disallowing postpetition interest."). Therefore, the Court finds ERGS's third alternative inapplicable.
Accordingly, the Court finds the adequate protection payments shall be added to the value of the Property, increasing the overall amount of collateral securing ERGS's claim and correspondingly reducing the amount of ERGS's unsecured deficiency claim.
Second Am. Disclosure Statement 14. The Court understands this to mean that ERGS may seek post-petition interest on the $38,390,000.00 value of its secured claim, but will only be entitled to do so should the adequate protection payments eliminate the unsecured deficiency and cause ERGS to be oversecured.
11 U.S.C. § 552(b)(1).