collateral exceeds the pre-bankruptcy debt (including pre-bankruptcy interest), then the secured creditor can receive post-bankruptcy interest_” WARREN & WEST-BROOK, THE LAW OF DEBTORS AND CREDITORS at 223, Little, Brown and Company (1986).
Next, we note that, in the present case, prior to the debtors’ bankruptcy filing, the IRS had perfected its tax lien and seized the debtors’ residence. The IRS’s seizure of the debtors’ residence was to satisfy liens for various unpaid taxes. Professors Warren and Westbrook, state: “Until the [tax] lien is filed, however, it is treated much like an unfiled security interest.... After the tax lien is filed, however, the TIB [Trustee in Bankruptcy] must recognize the lien in bankruptcy and treat the government as it does other perfected secured parties.” Id. at 463. Clearly, the academic view is that § 506(b) permits post-petition interest on oversecured tax liens.
The courts, however, are split on the issue. The most recent Circuit Court case is Best Repair Co., Inc. v. United States, 789 F.2d 1080 (4th Cir.1986). The Best Repair court held that § 506(b) permits an oversecured creditor to recover post-petition interest on a non-consensual claim such as tax liens. The court held that the United States, as an oversecured creditor, could recover its post-petition interest on a tax lien against the debtor. Best Repair implicitly overruled an earlier Fourth Circuit case, United States v. Harrington, 269 F.2d 719 (4th Cir.1959). Harrington, a case under the Bankruptcy Act, held that the IRS was not allowed post-petition interest on its tax liens. The difference between these cases is the adoption of § 506(b) in the 1978 Bankruptcy Code. This Court finds that the more recent Fourth Circuit case (which is a Bankruptcy Code case) is controlling in the present case.
The only relevant Texas case is McKee Aviation, Inc., Case no. 5-84-00687-11 (Bkrtcy.W.D. TX April 7, 1986). In McKee, Chief Judge Joseph C. Elliott ruled that, since the IRS was oversecured, the IRS had a secured claim that included post-petition interest. Judge Elliott ruled: “The Court further finds that the IRS’s secured claim includes post petition interest under 11 U.S.C. 506(b). This Court finds the language of that section unequivocal in providing interest to any oversecured creditor, while limiting fees, costs, or charges to consensual lienholders.” (Cites omitted). This Court is in accord with the opinion of Judge Elliott.
The debtors cite several cases that employ the consensual versus nonconsensual distinction. These cases are considerably older and were decided under the Bankruptcy Act. The theory in these cases is that oversecured consensual lienholders are entitled to post-petition interest, but ov-ersecured nonconsensual lienholders are not so entitled. This Court finds that logic to be flawed. The IRS should be no better off nor worse off than any other secured creditor. The IRS deserves equal treatment when compared to any other overse-cured creditor.
The most recent District Court case is Ron Pair Enterprises, Inc., 86-2 U.S.T.C. ¶ 9642 (E.D.Mich. June 30, 1986). In Ron Pair, District Judge Horace W. Gilmore reversed the Bankruptcy Court and ruled that the plain language of § 506(b) entitled the United States to post-petition interest on its oversecured claim. Judge Gilmore ruled: “... [T]he United States, [sic] is entitled to post-petition interest on its over-secured pre-petition tax claim pursuant to the provisions of 11 U.S.C., Section 506(b).” Again, this Court is in agreement with the result that was reached by Judge Gilmore.
There are several Bankruptcy Court cases that allowed post-petition interest on oversecured nonconsensual liens.
See, In re Bormes, 14 B.R. 895 (Bkrtcy.D.S.D.1981);
In re Loveridge Machine & Tool Co., Inc., 36 B.R. 159 (Bkrtcy.D.Utah);
In re Morrissey, 37 B.R. 571 (Bkrtcy.E.D. VA 1984). In addition, there are several Bankruptcy Court cases that specifically allow the IRS to receive post-petition interest on its oversecured tax liens.
See, In re Henzler Manufacturing Co., 55 B.R. 194