How to buy a company out of bankruptcy and keep the records worth having

What you actually buy in a bankruptcy sale

Most buyers of a bankrupt business buy assets, not shares. The debtor in possession in chapter 11, or the trustee in chapter 7, sells under section 363 of the Bankruptcy Code, and the court's order can transfer assets free and clear of liens and other interests when the conditions in section 363(f) are met. You get what the asset purchase agreement (APA) lists and the sale order approves, and nothing else.

That matters for records. A schedule that says "books and records" may hand you paper files and a customer list while the CRM tenant, the ticket history and the code repositories stay with the estate, or disappear when their subscriptions lapse. Years of operating history are often the cheapest part of the deal to buy and the easiest part to lose.

The federal courts' chapter 11 overview explains the difference between a debtor that keeps control of its assets while it reorganizes and a liquidating plan, which affects who you negotiate with and who signs.

Buying out of a receivership or an ABC instead

Not every distressed business is sold in bankruptcy. A receivership or an assignment for the benefit of creditors (ABC) changes who sells, who approves and how much comfort the buyer gets on title.

In an ABC, the company transfers its assets to an assignee who sells them and pays creditors from the proceeds, as this overview of alternatives to bankruptcy explains. State statutes set the procedure: in Florida, for example, chapter 727 has the circuit court supervise the assignee's administration. Ask counsel in the relevant state what a receivership or ABC sale actually conveys before you assume the same free-and-clear protection a 363 order gives.

Prerequisites before you bid

• Bankruptcy counsel who has closed 363 sales in the relevant district; local rules and judges' practices differ.
• A clear thesis for what you are buying: customers, people, product, locations or all of them.
• Data room access under the bidding procedures, plus time with management or the chief restructuring officer.
• Funding that matches the bid procedures, which typically set deposits, proof of funds and deadlines.
• An integration owner who will run day one, including systems and credentials.

PE platforms, independent sponsors and search funders are common buyers. The playbook for private equity operating partners covers how sponsor teams handle the portfolio side once the deal closes.

Step by step: buying the business and its records

1. Find the process early. Distressed businesses are often marketed in an accelerated sale process with a compressed timetable, sometimes with a stalking horse bidder whose agreement sets the baseline. Bidders who engage early have more say over which assets and records are in scope.
2. Diligence the systems, not just the financials. Ask for a list of systems with years of history, admin owners, renewal dates and anything already cancelled. Ask directly whether any system is scheduled to shut down before closing.
3. Write records into the purchased assets. Name the systems, tenants, databases, domains, code repositories and archives you want, along with the subscriptions or licenses needed to keep them running. Agree which records the estate keeps for its own administration, such as tax and litigation files, and give it reasonable post-closing access to what you buy.
4. Check the privacy limits. If the debtor's privacy policy restricted transferring personal information to unaffiliated parties, section 363(b)(1) allows a sale of that information only if it is consistent with the policy or the court approves it after a consumer privacy ombudsman is appointed and a hearing is held. In 23andMe's 2025 bankruptcy, the ombudsman recommended that any transfer of customers' genetic or personal data be prohibited without renewed opt-in consent.
5. Read the sale order before closing. The order, not your bid letter, sets the conditions on customer data, any use restrictions and what transfers free and clear.
6. Secure access on day one. Transfer super-admin credentials, pause auto-deletion, and export anything that lives in a subscription you are not taking over. If the estate needs money to keep systems alive until closing, the guide to DIP budgets and wind-down carve-outs shows where that funding usually comes from.
7. Inventory what you inherited. Within the first 90 days, list each system, its years of history, what can be exported and who created the material. Employee work product is generally owned by the employer under the work made for hire rules; contractor material may need a written assignment.
8. Decide whether to license. Once the business is yours, its owner, CEO or CFO can act as the authorized sponsor for a SourceX introduction. Before closing, any license of estate records is the estate's decision and, outside the ordinary course of business, generally goes to the court for approval; if a trustee takes control, see who controls records once a chapter 11 trustee is appointed for who signs.

What to ask for, system by system

Common mistakes buyers make with inherited records

Illustrative example: a records-aware 363 purchase

Illustrative and fictional. A lower-middle-market logistics platform bids for the assets of Calder Freight Services, a 160-person freight brokerage in chapter 11. The stalking horse APA lists only "books and records". In diligence, the platform's operating partner asks for the systems list and finds nine years of shipment exceptions in the transportation management system, eight years of email in a tenant the estate plans to close, and a ticketing system set to be cancelled at month end.

The platform amends its bid to name all three, adds a covenant not to cancel them before closing, and confirms the debtor's privacy policy covered business contacts only. A year after closing, with integration complete, the platform CFO runs the fit check and the combined business is introduced to SourceX with the CFO as authorized sponsor.

How the new owner introduces the business to SourceX

The business has to meet the baseline on its own: a US company with 50+ full-time employees at peak (contractors excluded), several years of documented operations, rights to license the data and an authorized sponsor. Strong candidates keep records across many systems, and most strong companies have 10-15+. History from before the filing can count, provided you bought those records and can show the chain of rights from the debtor.

Run the company fit checker, then capture the basics (company, sponsor, date, systems at metadata level) in the company introduction record template. If an operating partner, lender or advisor makes the introduction, 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 are payable only after the buyer pays and SourceX receives its fee, are never deducted from what the company receives, and no reward is guaranteed.

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

Next step

Before your next bid, add a named systems schedule to the APA markup. When the business is yours and clears the who qualifies baseline, register as a partner to introduce it, or have the CEO apply at sourcex.si/apply.