When a shipper files bankruptcy, it’s generally not good news for a motor carrier. However, motor carriers are often in a unique position that might allow them to do better than fellow creditors from other industries, recovering some or all of the unpaid pre-petition debt, while continuing to do business and get paid on a post-petition basis. Although under a bit more scrutiny since a federal circuit court decision in In re Kmart Corp., 359 F.3d 866 (7th Cir.

In a divided opinion Tuesday, the Court of Appeals held that a lease and guaranty are separate contracts, even when the guaranty is incorporated into the lease. SeeFriday Investments, LLC v. Bally Total Fitness of the Mid-Atlantic, Inc. For this reason, the court held, a guaranty might be discharged in bankruptcy – even where the tenant assumes the lease to which it is attached and incorporated.