Brookhaven seeks administrative expenses totaling $284,109.40 which it says are due it under the lease, plus $13,066.57 due under the note, all pursuant to 11 U.S.C. '503(b). In addition it seeks $19,593.75 as the reasonable and necessary costs of selling Waterbed Galleries' inventory pursuant to 11 U.S.C. '506(c). Waterbed Galleries apparently decided to go out of business some time after its Chapter 11 plan was confirmed on June 14, 1995, and held liquidation sales beginning in August 1996.

Brookhaven responds that the note was part of the adequate assurance required to be paid pursuant to 11 U.S.C. '365(b)(1)(B) before the lease could be assumed. Brookhaven maintains that the Court's Order of March 23, 1994, establishes the administrative expense nature of the payment of arrearages by requiring that they be paid pursuant to the terms of the note. Brookhaven has cited In re Klein Sleep Products, Inc., 78 F.3d 18 (2nd Cir. 1996) in support of its position. The Klein Sleep Products court stated:

At page 26. The Court finds that the subject note is evidence of the obligation to pay rent and cure the then existing default in the lease pursuant the Court=s order allowing assumption and not a separate obligation. Rent due under the lease up to the point of confirmation of the plan is an administrative expense. The issue of post-confirmation rent due on an assumed lease as an administrative expense is reserved, and will not be ruled on, as it is not specifically addressed, nor adequately treated herein. Farmers Bank and Capital Trust Co. ("Farmers Bank") opposes Brookhaven's motion in regard to the surcharge of collateral. Farmers Bank was a creditor secured by substantially all of Waterbed Galleries' inventory and assets; it states that it is still owed $952,128.29 on its prepetition claims. It asserts that the motion must be overruled in regard to the surcharge of collateral and recovery of funds because Brookhaven lacks standing to make such a motion, and the Court lacks jurisdiction to enter such an order.

Brookhaven bases its position on several elements, the first of which is the language of paragraph 10.2 of the Chapter 11 plan in which the Court retained jurisdiction "[t]o determine all Claims, and the amount thereof, arising from the rejection of executory contracts and unexpired leases and to hear and determine all matters relating to the assumption and assignment of executory contracts and unexpired leases." It also looks to 11 U.S.C. '506(c) in regard to the issue of surcharge of collateral. That statute provides that "[t]he trustee may recover from property securing an allowed secured claim the reasonable, necessary costs and expenses of preserving, or disposing of, such property to the extent of any benefit to the holder of such claim."

Brookhaven also cites In re Visual Industries, Inc., 57 F.3d 321 (3rd Cir. 1995) in support of its position on the issue of surcharging collateral. The Visual Industries court does support Brookhaven on the issue of standing. It held that "[a]lthough '506(c) in terms refers only to recovery by the trustee, we, like many other courts, have held that administrative claimants other than trustees have standing to recover under '506(c), particularly when no other party has an economic incentive to seek recovery on the claimant's behalf." At page 325. Clearly, then, Brookhaven has standing to bring its motion in this regard. However, the Court must first decide whether '506(c) applies in a post-confirmation situation. Farmers Bank contests Brookhaven's assertion of this Court's jurisdiction to rule on its motion, and cites in support In re Cary Metal Products, Inc., 152 B.R. 927 (N.D.Ill. 1993). The jurisdictional question aside, this Court finds no support for the application of '506(c) post-confirmation. As stated in In re Maine Pride Salmon, Inc., 180 B.R. 337 (Bkrtcy.D.Me. 1995):

At pages 341-342. Since 11 U.S.C. '506(c) does not apply to such post-confirmation transactions, the motion of Brookhaven should be overruled in this regard.