Independent directors on a restructuring committee: putting records on the agenda

Why independent directors are well placed to protect records value

A restructuring committee exists to make decisions that conflicted insiders should not: approving the sale process and the stalking horse, weighing settlements with the sponsor or lenders, overseeing investigations of insider transactions and signing off on the wind-down. Its authority usually comes from a board resolution or charter, and it typically hires its own counsel and often its own financial advisor.

That mandate covers every asset the company owns, including the ones nobody has priced. Operational records are a common blind spot. Email archives, chat workspaces, ticket histories, CRM activity, engineering repositories and SOPs rarely appear in a liquidation analysis, and they disappear quickly once subscriptions lapse and administrators leave. For a company that had 50+ full-time employees at peak (contractors excluded), AI developers may license those records through SourceX, which manages licensing from rights review to delivery and payment.

In chapter 11, the committee's role continues after the filing because the company usually stays in control of its assets. The federal judiciary's chapter 11 overview explains that the debtor ordinarily remains in possession and control of its assets as debtor in possession and proposes the plan, which may be a liquidating plan. Records decisions therefore stay with the board and its committee unless a trustee is appointed.

Which companies on your boards fit

The CARE agenda item for a restructuring committee

Add one standing item to committee meetings until the records question is resolved. Four questions, minuted each time:

• Custody: who holds super-admin access to each core system today, and what happens to that access when staff leave?
• Authority: does the committee's mandate cover a records license, or does it need full board, lender or court approval?
• Rights: has counsel confirmed that the company created the records and that contracts and privacy promises allow licensing?
• End state: for each system, is the plan to sell it with the business, license the records, preserve them for the estate or destroy them under an approved plan?

The company fit checker offers a quick, non-binding first look at whether the company meets the who qualifies baseline. Mapping the systems is technical work; a fractional CTO or the company's remaining IT lead can produce the inventory the committee needs.

When to raise records on the committee calendar

A side-by-side of Article 9 dispositions and 363 sales helps when lenders are pushing for a foreclosure rather than a court sale, and private credit lenders taking the keys covers the board's position when lenders become owners.

How the introduction works from the boardroom

The committee directs, management and advisors execute, and no director touches the data.

1. The committee asks management or the CRO to assess the records and report back at the next meeting.
2. Management or one of the committee's advisors introduces the company to SourceX, or the company applies directly at sourcex.si/apply.
3. SourceX confirms peak headcount, operating history, the range of systems and the company's rights with the authorized officer.
4. The company completes a data inventory listing systems, years of history and export options.
5. Price and terms come back to the committee for approval; in a bankruptcy case, estate counsel takes any license outside the ordinary course to the court.
6. Buyer review follows; when the company is deal-ready, responses typically arrive within about two weeks.
7. Once the agreement is executed, the data team works to the redaction and de-identification standards fixed before work began, delivers the records and the company is paid once.

Directors who want background on the wider legal debate can look at the Copyright Office's work on copyright and artificial intelligence, which includes a pre-publication report on generative AI training that discusses licensing approaches. Advice on any specific license should come from committee counsel.

What to say in the committee meeting

Rewards, conflicts and disclosure for directors

An independent director's value rests on having no personal interest in the transactions the committee approves. A referral reward tied to a company on whose board you sit would be exactly that kind of interest. Raise it with committee counsel before doing anything, disclose it as your conflict rules require, and expect that the cleanest answer for a company you govern is to let the company apply directly without any referral arrangement.

Outside your board seats, the program works the same way as for any partner. 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. Rewards become payable only after the buyer pays and SourceX receives its fee; an introduction, meeting or signed agreement alone does not trigger payment, and no reward is guaranteed. Advisors on other sides of a case face related questions; see the pages for creditors' committee financial advisors and distressed M&A bankers.

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

When the records question can be closed quickly

• Headcount never hit 50+ full-time employees at peak (contractors excluded).
• Most of the records belong to clients, as at many outsourcers and agencies.
• The material is mostly consumer personal data or protected health information.
• Systems were already shut down without exports.
• A court-appointed trustee now controls the assets, so the decision is no longer the committee's.

Next step

Put the CARE agenda item on your next committee meeting. For companies outside your board seats, register as a partner and make introductions after checking your own conflict rules; for a company you govern, ask management to apply directly at sourcex.si/apply.