Litigation hold vs data destruction in a wind-down: where does licensing fit?

Does a preservation duty block a data license?

No, but it sets the order of operations: preserve first, review rights, get approvals, then license copies. A company that is winding down, restructuring or facing a dispute may be under a duty to keep records, and that duty comes from law, contracts, regulators or a lawyer's instruction, not from SourceX. A license does not replace that duty, and a license never justifies deleting anything.

For a restructuring professional the practical rule is short. Do not let any archive, mailbox, tenant or backup be deleted until counsel has said what must be preserved and who controls the assets. Once that is settled, a licensed copy of eligible records can sit alongside the preserved originals, subject to the approvals described below.

This is general information, not legal, tax or financial advice. Confirm with your own counsel before acting.

What is the difference between a litigation hold and a destruction schedule?

A litigation hold is a notice, usually issued by counsel, that tells people to stop deleting and altering records that may be relevant to a dispute or investigation. A destruction schedule is the ordinary retention policy that deletes records on a timer. Counsel normally suspends the schedule for records a hold covers.

No single period fits every record, because duties depend on the type of record, the regulator and the dispute. Tell clients that plainly and ask counsel, rather than quoting a period.

Who controls the records once a company is in a formal process?

Control depends on the process. In chapter 11 the debtor ordinarily keeps possession and control of its assets as debtor in possession, as the federal courts' chapter 11 basics explain; in a liquidation a trustee may control them instead. In an assignment for the benefit of creditors, the assignor transfers assets to an assignee who holds them in trust and liquidates them, per the open textbook explanation of alternatives to bankruptcy. State law governs ABCs and receiverships, and procedures vary.

The takeaway: before any conversation about licensing, identify who holds authority to sell or license the records and whose approval is required. If a court, trustee, receiver or assignee controls the assets and has not been involved, the company is not ready, which is one of SourceX's red flags.

How do privacy promises affect a licensed copy in an insolvency?

If records include customer personal information, the company's own privacy promises matter. Under the Bankruptcy Code, where the debtor's privacy policy prohibited transferring personally identifiable information to unaffiliated persons, section 363(b)(1) restricts a trustee from selling or leasing that information unless the sale is consistent with the policy or the court approves after a consumer privacy ombudsman is appointed under section 332. The statute describes a process, and a hearing may be required.

For a licensing introduction this means one thing: records that are mainly consumer personal data are a poor fit, and any dataset that touches personal information needs de-identification and redaction rules agreed before work begins. The FTC has also said in a staff post on privacy commitments that companies' promises about how customer data is used, including for model training, can be enforced against a company that breaks them.

How should a preservation plan and a licensing review sit together?

Use the preserve, approve, copy sequence.

1. Preserve. Freeze deletion jobs, auto-expiry, license cancellations and tenant shutdowns for in-scope systems. Record the date and who ordered it.
2. Identify control. Name the person with authority: the debtor's officers, the trustee, the assignee, the receiver or the owner.
3. Get counsel's scope. Ask counsel which records are covered by a hold or other duty and which are free to be reviewed.
4. Inventory. The company, not the partner, lists systems, years of history and what can be exported. The data inventory builder helps structure the list.
5. Seek approvals. Court, trustee, assignee, lenders or the board approve any license as their process requires.
6. License copies. Only exports of eligible records move forward, under an executed agreement and agreed redaction rules. The originals stay preserved.

Nothing here requires the partner to open, export or describe any record. Partners make the introduction and share basic fit information only.

Which situations call for a stop?

What do I say to the owner or estate counsel?

For a broader view of choices at the end of a business life, see alternatives to closing a business. A first-month referral plan for wind-down advisors lays out the early weeks, and warm introduction vs cold outreach explains why a trusted advisor should make the first contact.

How do rewards work for a restructuring professional?

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. The reward is paid only after the buyer pays and SourceX receives its fee, and no reward is guaranteed. Court-appointed professionals, trustees and assignees should confirm with counsel and, where required, the court whether they may receive any reward at all. The program terms explain how rewards are handled.

When is this the wrong route?

• The estate or company cannot say who controls the records.
• A hold exists and counsel has not cleared any review.
• The data is mainly someone else's, such as clients of an outsourcer.
• The data has already been licensed for AI training.
• Archives are gone and nobody can export what remains.

Check the company fit checker and the who qualifies page. Related questions about ownership after licensing appear in who owns an AI model trained on licensed data, and a firm advising several entities can read about pooling portfolio data into one license.

Next step

Preserve first, then ask the license question. If the company passes the screen, register as a partner and make the introduction, or have the authorized sponsor apply at sourcex.si/apply.