## Facts

- The United States government loaned money to Atcorp I, Inc. (Atcorp) and received a promissory note that accrued interest.
- Atcorp’s principal officers, including Richard A. Bruno and Robert J. Bruno, executed personal guaranties in connection with the loan.
- The guaranty agreement stated that the officers’ liability would continue even if Atcorp filed for bankruptcy or was otherwise released from the underlying debt.
- Atcorp later filed a bankruptcy petition.
- After the bankruptcy filing, interest continued to accrue on the loan (postpetition interest).
- The government sued the officers on their guaranties to recover the postpetition interest.
- The officers argued that because postpetition interest is generally not collectible from a debtor’s bankruptcy estate, the government also could not recover it from them as guarantors.
- The district court granted summary judgment for the government, holding the officers liable for postpetition interest under the terms of the guaranty, and the officers appealed.

## Issues

1. Does the Bankruptcy Code’s general disallowance of postpetition interest against a debtor’s estate (11 U.S.C. § 502(b)(2)) prevent a creditor from collecting that postpetition interest from non-debtor guarantors when the guaranty provides for liability despite the debtor’s bankruptcy?

## Decision

- The First Circuit affirmed the district court’s grant of summary judgment for the government.
- The court held that § 502(b)(2) limits what can be allowed and paid from the bankruptcy estate, but it does not bar enforcement of a separate contractual obligation undertaken by non-debtor guarantors.
- Because the guaranty expressly provided that the officers would remain liable even if Atcorp entered bankruptcy or was released from the debt, the government could recover postpetition interest from the officers.

## Legal Principles

- Section 502(b)(2) disallows claims for unmatured (postpetition) interest in the allowance and distribution of claims against the bankruptcy estate; it does not erase the underlying contractual right to interest outside the bankruptcy case.
- A guaranty is an independent contract: a creditor’s inability to collect a category of amounts from the debtor’s estate does not, by itself, reduce a guarantor’s agreed liability.
- Bankruptcy relief for the debtor does not automatically discharge or limit the liability of non-debtors on related obligations; absent a statutory bar, creditors may pursue guarantors for amounts promised in the guaranty.
- When a guaranty specifically addresses the effect of the debtor’s bankruptcy (or release) and preserves the guarantor’s liability, courts will enforce that allocation of risk according to its terms.

## Conclusion

In re Bruno holds that the Bankruptcy Code’s bar on collecting postpetition interest from a debtor’s bankruptcy estate does not stop a creditor from enforcing a guaranty against non-debtor officers for that same postpetition interest, especially where the guaranty states the officers remain liable despite the debtor’s bankruptcy or release.


In re Bruno, 747 F.2d 53 (1984)