Opinion ID: 769357
Heading Depth: 3
Heading Rank: 1

Heading: Necessity and Reasonableness

Text: 12 We measure the necessity and reasonableness of the Debtor's incurred expenses against the benefits obtained for the secured creditor and the amount that the secured creditor would have necessarily incurred through foreclosure and disposal of the property. See In re Chicago Lutheran Hosp. Ass'n, 89 B.R. 719, 727 (Bankr. N.D. Ill. 1988). The threshold inquiry is whether the services for which asurcharge is sought were necessary to the secured creditor, here the Banks. We conclude they were not. Had the Banks foreclosed at the outset of the Chapter 11 proceedings, all junior liens, including mechanics liens, would have been eliminated or paid after the Banks' loan was satisfied. Moreover, the Banks could have internalized many of the post-petition costs incurred by the Debtor and its professionals simply by using in-house resources. In any event, many of the costs were incurred pursuant to the cash-collateral stipulations, and none of those costs would have been incurred had the Banks initially foreclosed on the property. To the extent any of the costs incurred pursuant to the cash-collateral stipulations were necessary to completion of the development and sale of the units, the Debtor and its professionals were paid for those services through the carve-outs in the cash-collateral stipulations. Additional expenses beyond those covered by the carve-outs merely aided the Debtor in its attempt to salvage some equity from the project; they were not necessary to the Banks, nor were they reasonably incurred insofar as the Banks' recovery was concerned.