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B-231107 1 (1989-02-03)

handle is hein.gao/gaobadnjg0001 and id is 1 raw text is: 0The Comptroller General of the United States Washington, D.C. 20548 UNIT$ Decision Environmental Protection Agency--Priority of Matter of- Payment--Assignment of Claims File: B-231107 Date: February 3, 1989 DIGEST 1. Order of priority for the payment of remaining contract proceeds held by EPA, the contracting federal agency, is fir.t to the IRS for the tax debts owed by the contractor and the remaining funds to the trustee in bankruptcy. 2. Since the assignee of amounts retained by contracting agency did not render any financial assistance to specifically facilitate the performance of the government contract, the assignment is invalid against the government. Accordingly, the assignee is not entitled to any of the remaining contract proceeds held by a contracting federal agency. 3. The government's right of set-off is affected by the filing of a bankruptcy petition. Under the bankruptcy law, although a party's right to set- off is preserved, 11 U.S.C. S 553, the automatic stay provision does not allow the exercise of that right unless the creditor obtains relief from the bankruptcy court. 11 U.S.C. § 362(a)(7). Therefore, before the government can exercise its right of set-off against the remaining contract proceeds of a bankrupt contractor, it must apply to the bankruptcy court to have the automatic stay lifted. DECISION Pursuant to 31 U.S.C. § 3529, the Comptroller of the United States Environmental Protection Agency (EPA), has asked for our opinion concerning the order of priority of payments among three claimants of the remaining $35,978.22 proceeds of a contract between the EPA and ESEI, Inc. (EPA Contract No. 68-04-5017). The claimants are the Internal Revenue

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