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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND MARK R. KIVITZ v. THE CIT GROUP/SALES FINANCE, INC. * * * Civil No. JFM-99-931 * * * *****

MEMORANDUM

Mark R. Kivitz, the former attorney for the debtor (White Marlin Marine, Inc.), has appealed an order by the Bankruptcy Court declining to surcharge CIT's collateral in order to pay fees for services performed by Kivitz to the debtor in a Chapter 11 case. The order will be affirmed.1 I. As a general rule, administrative costs of a reorganization, including attorneys' fees incurred in connection with efforts to reorganize the debtor, may not be charged against the collateral of a secured creditor. See In re Pullman Constr. Indus., Inc., 107 B.R. 909, 942 (Bankr. N.D. Ill. 1989). Section 506(c) of Title 11 provides an exception to allow a surcharge for reasonable and necessary expenses where the trustee has (1) incurred the expenses in preserving or disposing of the debtor's property, and (2) benefitted the secured creditor by its actions. The reason for the rule is that unsecured creditors should not be required to bear the cost of protecting property that is not theirs and to require the secured party to bear the cost of preserving or disposing of its own collateral. See In re Condesco,

This appeal has been pending for almost a year. In light of the age of the case and the importance of avoiding further delay in decision, I will dispense with any discussion of the facts and assume that the reader of this opinion has a working knowledge of the governing rules and principles.

1

Inc. 18 B.R. 225, 229 (Bankr. S.D.N.Y. 1982); In re Visual Indus., Inc., 57 F.3d 321, 325 (3rd Cir. 1995). Typically,

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