Opinion ID: 604935
Heading Depth: 3
Heading Rank: 2

Heading: Increase in Deficiency Claim

Text: 25 The second argument raised by Trustee to persuade this Court that Nalley failed to establish entitlement to an administrative expense claim is based on language from the James B. Downing case. The court in James B. Downing faced the question of whether the provision of adequate protection was a prerequisite to the grant of an administrative expense priority. In resolving this issue the court quoted a passage from Bankruptcy by Ginsberg which states in part: 26 If the adequate protection given by the court proves to be inadequate, that is, the secured creditor winds up being injured from the continuation of the stay, use of the property, or funding the estate in the sense that its unsecured deficiency claim against the estate is increased, the creditor is entitled to a superpriority for the increase in the deficiency. 27 In re James B. Downing & Co., 94 B.R. at 521, quoting Ginsberg, Bankruptcy p 10,705 (1986). The Trustee seizes upon this language as establishing that an administrative expense claim is based on the amount by which an unsecured deficiency claim increases by virtue of the automatic stay. Here, the Trustee maintains that Nalley had no unsecured deficiency claim because of Paccar's failure to comply with Georgia foreclosure laws, and accordingly no administrative expense claim could arise because there was no increase in an unsecured deficiency claim. 28 The Trustee's argument fails to recognize the nature of an administrative expense claim. As described above, Nalley's administrative expense claim is distinct from the deficiency claim it might have perfected. Contrary to the implications of the dicta from James B. Downing relied upon by the Trustee, an administrative expense claim is based on the diminution in the value of the collateral by reason of the automatic 362 stay. Grundy Nat'l Bank v. Rife, 876 F.2d at 364; see also In re Colter, Inc., 53 B.R. 958, 961 (Bankr.D.Colo.1985) (Section 507(b) confers a superpriority administrative expense claim to the extent the creditor has suffered an actual decrease in the value of its interest in the collateral due to the automatic stay and the debtor's use of its collateral, less any adequate protection payments made by the debtor); In re Becker, 51 B.R. 975, 980 (Bankr.D.Minn.1985) (Actual loss sustained due to failure of adequate protection determines the amount allowed as a superpriority administrative expense under § 507(b)). Because Nalley's administrative expense claim arose from the deterioration in the value of the trucks rather than an increase in its deficiency claim on the sales contracts, the Trustee's argument cannot prevail.