The West Nottingham Academy in Cecil County, the above-captioned reorganized debtor (the “Debtor”), filed a Motion for Refund of Excess Adequate Protection Payments (the “Motion”). By the Motion, the Debtor asserted that certain funds paid to First National Bank (“FNB”) as adequate protection during the pendency of the subchapter V case should be refunded to the Debtor. FNB filed an objection to the Motion. The primary issue presented by the Motion was whether the Court should direct FNB to return the sum of $146,585.17 (the “Adequate Protection Payments”) to the Debtor. The Debtor made the Adequate Protection Payments to FNB under a series of orders of the Court addressing the Debtor’s postpetition use of cash collateral. Those orders reserved the Debtor’s right to seek a refund of the Adequate Protection Payments, pending a valuation of FNB’s collateral. That reservation of rights was specifically noted in the Debtor’s confirmed plan. 

The Court determined that the reserve funds used to make the Adequate Protection Payments were property of the estate and available for the Debtor’s general use in the case. Moreover, FNB’s claims were significantly oversecured at the petition date and during the case, as the amounts withdrawn from the reserve account were protected by a large equity cushion in the collateral. Based on the facts of the case and the terms of the cash collateral and confirmation orders, the Court held that the Debtor was entitled to a refund of the Adequate Protection Payments for use in satisfying its obligations under the confirmed plan.