Data assets in an ABC: how an assignee can sell or license company records

The short answer: the assignee controls the data, within state law and the assignment

An assignment for the benefit of creditors (ABC) moves a failing company's assets to an assignee, who turns them into cash for creditors outside the bankruptcy system. Data assets travel with everything else: the CRM, the help desk history, shared drives, code repositories and the finance system. Once the assignment is signed, the assignee is the person who can authorize a sale or license of those records, within the limits of state law and the assignment document.

The hard part is timing. Records only have value if they still exist and can be exported. In a wind-down, subscriptions lapse, administrators leave and vendors eventually stop holding data nobody pays for. A data license is possible only if someone preserves the archive in the first weeks.

How does an ABC transfer control of data?

The mechanics are simple; the legal frame is state-specific.

1. The assignment. The company, as assignor, transfers its assets to an assignee who holds them in trust, liquidates them and distributes the proceeds to creditors. An open commercial law textbook describes this structure and notes that a common-law assignment does not by itself discharge the unpaid balance of the company's debts, though some state statutes address this.
2. State procedure. Some states run ABCs under a statute with court supervision. Florida's chapter 727 (2024 text), for example, states an intent to provide a uniform procedure for administering insolvent estates and keeping creditors informed, places proceedings under circuit court supervision, sets claim priorities and provides for the assignee's final report and discharge. Other states lean more on common law, so procedures differ.
3. The assignment document. It lists what transfers and what powers the assignee holds. Broad language usually captures intangible assets such as databases, software accounts, domain names and records, but the assignee's counsel should confirm it does.
4. Liens and contracts. Secured lenders may hold liens that reach intangible assets, and vendor and client contracts may restrict how data can be used. Both shape what the assignee can offer.

ABC vs chapter 7: what changes for data assets?

The biggest differences are who is in charge and which privacy checkpoint applies.

In bankruptcy, 11 U.S.C. section 363(b)(1) provides that if the debtor's privacy policy prohibited transferring personally identifiable information to unaffiliated persons and was in effect when the case began, the trustee may not sell or lease that information unless the sale is consistent with the policy or the court approves it after appointing a consumer privacy ombudsman, giving notice and holding a hearing. The word lease matters: a license of personal data falls in the same frame.

An ABC has no equivalent federal checkpoint, which is not the same as having no constraint. The promises still bind under nonbankruptcy law. The consumer privacy ombudsman guide covers the bankruptcy side, and the page on privacy policies that say 'we do not sell data' explains how those promises are read outside it.

For completeness, the federal judiciary's bankruptcy basics explain that in chapter 11 the debtor usually stays in possession and control of its assets and a plan may be liquidating, while in chapter 7 a trustee sells nonexempt property and distributes the proceeds.

Should the assignee sell the data or license it?

It depends on who wants the records and for what.

Licensing through SourceX means one all-in price with SourceX's fee included, paid as a one-time payment, typically within about 60 days of invoicing once the buyer selects the data. Nothing binds the estate until the assignee agrees price and terms and signs. For an assignee working toward a final report, that timing belongs in the plan from the start.

What must the assignment and state law allow?

Run this checklist with the assignee's counsel before any introduction goes further.

• The assignment document transfers intangible assets, including records, databases and software accounts.
• The assignee has power to sell or license assets, or knows which court approval or creditor notice the state process requires.
• Secured creditors with liens on intangibles are identified and their consent or release is planned.
• Client and vendor contracts are checked for limits on using data the company held.
• Privacy policies, terms of service and employee notices in force during the years in scope are collected.
• Someone with admin access can preserve and export each system.

Which records stay out of an estate license?

• Client-owned records. Agencies, outsourcers and service firms often hold data that belongs to their clients. Without client consent, that material is out.
• Consumer personal data. If the valuable records are mainly consumer personal information with no licensing basis, a license is unlikely.
• Health information. Protected health information needs authorization or de-identification; plan for it to be excluded.
• Employee records. HR files and personal messages come out; operational work product can stay in with redaction.
• Previously licensed data. If the company already licensed the same records for AI training, that is usually disqualifying for those records.

The privacy due diligence checklist gives the assignee's counsel a structured list of documents to pull.

Timeline: preserve the records before the systems go dark

Once a company is deal-ready, buyers typically respond within about two weeks, but the inventory and rights review come first, so the introduction should happen early in the case.

How a partner introduces an assignee

Turnaround consultants, chief restructuring officers, insolvency counsel, lenders' workout teams and advisers running distressed sales often see an ABC coming before anyone else.

1. Check the baseline. Look for a US company that reached 50+ full-time employees at peak (contractors excluded), ran for several years with documented operations, still has its data, and has an assignee or other authorized representative able to sign. Wound-down companies can qualify; the who qualifies page sets out the full baseline.
2. Introduce the decision-maker. Connect SourceX with the assignee or the assignee's counsel through your referral link or the referral form. An estate where the assignee has not been involved is a red flag, not a lead.
3. Stay out of the records. Share basic fit information only; partners never export, upload or describe confidential records.
4. Let the review run. SourceX qualifies the opportunity, the assignee completes a data inventory, and price and terms are agreed before buyers review it.
5. Close in order. The assignee signs, the data is delivered under redaction rules agreed in advance, the estate is paid, and any partner reward follows after SourceX receives its fee.

The company fit checker gives a quick, non-binding read before you call the assignee, and how it works lays out the full sequence.

How rewards work for restructuring professionals

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, and no reward is guaranteed. The reward is a share of SourceX's fee, so it never reduces what the estate receives.

Fiduciary roles need extra care. If you are the assignee, a professional retained by the estate or a court-appointed officer, a personal reward tied to an estate asset may conflict with duties owed to creditors. Disclose it, seek any required approval, or decline it, and ask counsel first. The rewards page and the program terms set out the current rules.

Questions to ask counsel

• Does the assignment transfer the data assets and give the assignee power to license them?
• Does our state's ABC process require court approval or creditor notice for this transaction?
• Which liens reach the records, and what releases are needed?
• Which privacy promises, client contracts and employee notices limit the scope?
• Would an exclusive AI-training license affect the value of a later sale of the same records?

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

Next step

If an ABC is coming up or already underway in your practice, register as a partner and introduce the assignee before admin access disappears. Assignees can also apply directly at sourcex.si/apply.