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43 Procurement Law. 1 (2007-2008)

handle is hein.journals/procurlw43 and id is 1 raw text is: 

















A Government Contract and Bankruptcy

Law Conundrum: Interpretation of the

Anti-Assignment Act and Related Matters

By PERRY COCKERELL AND ROBERT A. BAEmu


      Perry Cockerell           Robert A. Bartlett


The Constitution gives Congress the power to establish
uniform Laws on the subject of Bankruptcies throughout
the United States.' When it comes to the application of
the Anti-Assignment Act' in bankruptcy reorganization
proceedings,3 however, this paramount goal of uniformity
does not exist. Rather, a fundamental schism has devel-
oped among the various federal circuit courts regarding
the impact of the Anti-Assignment Act on the process by
which a government contractor in financial straits seeks to
reorganize or restructure its business operations for the
benefit of itself and its creditors. In some circuits, the
Anti-Assignment Act has been interpreted to mean that
the filing of a bankruptcy reorganization by a contractor
will effectively result in the immediate termination of its


Perry Cockerell is a partner with Cantey Hanger LLP in Dallas, Texas;
Robert A. Bartlett is a partner with McKenna Long & Aldridge LLP in
Atlanta, Georgia.


federal government contracts. In other circuits, the Act
has been interpreted in less draconian fashion to allow the
contractor to continue performance of its federal govern-
ment contracts conditionally during the course of its reor-
ganization-but with no assurance that those contracts
will survive the reorganization.
   It is our view that both of these lines of cases result
from a fundamental misunderstanding and misinterpreta-
tion of the Anti-Assignment Act and its interplay with
the provisions of the Bankruptcy Code that govern the
ability of a debtor to continue the performance of its exist-
ing contracts during the course of its reorganization,4 and
allow a debtor to assume, and, if applicable, assign its
existing contracts as part of its reorganization.5
   In accepting or failing to reject the concept that the
Anti-Assignment Act is applicable law that would
excuse the federal government from accepting perfor-
mance under a government contract from anyone other
than the debtor or debtor-in-possession (a debtor autho-
rized to continue to conduct its business after the filing of
                               (continued on page 13)


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