FAR 52.242-13—Bankruptcy.
Plain-English Summary
FAR 52.242-13, Bankruptcy, requires a contractor to promptly notify the Government if it enters bankruptcy proceedings, whether the filing is voluntary or involuntary. The clause specifies the method of notice, the five-day deadline, the required contents of the notice, and the contracting officer who must receive it. It also requires the contractor to identify the bankruptcy filing date, the court where the petition was filed, and all Government contracts for which final payment has not yet been made, including the relevant contracting offices. In practice, this clause gives the Government early warning that a contractor’s financial distress may affect performance, payment, administration, and risk management across one or more contracts. It also helps the contracting officer coordinate internally and protect the Government’s interests while the bankruptcy case is pending. The obligation continues until final payment under the contract, so the duty to notify does not end merely because the bankruptcy is filed.
Key Rules
Notice of bankruptcy filing
If the contractor enters bankruptcy proceedings, voluntary or involuntary, it must notify the contracting officer responsible for administering the contract. The clause is triggered by the initiation of the proceedings, not by later court actions or confirmation of a plan.
Five-day reporting deadline
The contractor must provide written notice within five days of the initiation of the bankruptcy proceedings. This is a short, mandatory deadline, so contractors need internal procedures to ensure rapid escalation and reporting.
Required notice contents
The notice must include the date the bankruptcy petition was filed, the identity of the court where it was filed, and a list of Government contract numbers and contracting offices for all Government contracts against which final payment has not been made. The Government needs enough information to identify all affected contracts and coordinate administration.
Approved delivery methods
The notice must be sent by certified mail or by an electronic commerce method authorized by the contract. Contractors should use a method that creates proof of delivery and complies with any contract-specific electronic communication rules.
Continuing obligation until final payment
The duty to notify remains in effect until final payment under the contract. If bankruptcy-related developments occur while the contract is still open and unpaid, the contractor must continue to ensure the Government receives the required notice.
Responsibilities
Contractor
Monitor for bankruptcy-related events and provide written notice to the responsible contracting officer within five days of the filing or initiation of proceedings. The contractor must include the filing date, court identity, and a list of all Government contracts with unpaid final payment, and must use certified mail or an authorized electronic commerce method.
Contracting Officer
Receive the bankruptcy notice and use the information to assess contract administration, payment status, and any needed coordination with legal, finance, or program personnel. The contracting officer should ensure the notice is associated with the correct contract and that affected contracts are identified.
Agency/Contract Administration Staff
Support the contracting officer by tracking the impact of the bankruptcy on performance, payments, and open contract actions. They may need to coordinate across multiple contracts if the contractor lists several Government awards with unpaid final payment.
Practical Implications
Contractors should have a bankruptcy escalation process in place so the five-day deadline is not missed, especially when the filing is made by a parent, affiliate, or through counsel without immediate procurement notification.
The notice must be complete; omitting the court, filing date, or other affected contracts can create compliance problems and delay Government response.
Because the clause applies until final payment, contractors should not assume the obligation ends when performance is complete or when a bankruptcy case is already underway.
Contracting officers should treat the notice as an early risk signal and verify whether other contracts with the same contractor are also affected.
A common pitfall is sending notice to the wrong office or by an unapproved method; contractors should confirm the responsible contracting officer and retain proof of delivery.
Official Regulatory Text
As prescribed in 42.903 , insert the following clause: Bankruptcy (July 1995) In the event the contractor enters into proceedings relating to bankruptcy, whether voluntary or involuntary, the contractor agrees to furnish, by certified mail or electronic commerce method authorized by the contract, written notification of the bankruptcy to the contracting officer responsible for administering the contract. This notification shall be furnished within fivedays of the initiation of the proceedings relating to bankruptcy filing. This notification shall include the date on which the bankruptcy petition was filed, the identity of the court in which the bankruptcy petition was filed, and a listing of government contract numbers and contracting offices for all government contracts against which final payment has not been made. This obligation remains in effect until final payment under this contract. (End of clause)