De minimis asset sale procedures in chapter 11: when a records license fits the order

The short answer: it depends on the order, not a statute

De minimis asset sale procedures are a court order, not a section of the Bankruptcy Code. A chapter 11 debtor asks for them, often in its first-day or second-day motions or when a wind-down starts, so that small sales can close on short written notice instead of a full motion each time. Whether a records license can run through one turns on three things: whether the order's definitions reach a license of business records, whether the price fits a value tier, and whether the deal falls into one of the order's exclusions. If any answer is no, the license needs its own motion.

Thresholds, notice periods and exclusions are negotiated case by case with the US Trustee, any official committee and the secured lenders. Read the order entered in your case; precedent from another docket tells you what is possible, not what applies.

What does the statute underneath say?

The authority sits in section 363 of the Bankruptcy Code, which governs the use, sale and lease of estate property. Under section 363(b)(1), using, selling or leasing estate property other than in the ordinary course of business requires notice and a hearing. A de minimis order does not remove that requirement. It is the court deciding in advance what notice, and what chance to object, is enough for a defined class of small transactions.

Section 363(b)(1) also contains a limit aimed at personal data. If the debtor disclosed a privacy policy prohibiting transfer of personally identifiable information to unaffiliated persons, and that policy was in effect when the case began, the estate may not sell or lease that information unless the transaction is consistent with the policy, or the court approves it after a consumer privacy ombudsman is appointed under section 332 and after notice and a hearing. Section 332 has the US Trustee appoint the ombudsman no later than 7 days before that hearing. A short-notice procedure built to avoid hearings is a poor vehicle for that path.

How are tiered de minimis orders usually built?

Orders differ, but most requests follow a recognizable pattern. Treat the table as a map of features to look for in your order, not a statement of what any court will grant.

The three-gate test for a records license

Run these gates in order. A license that clears all three can usually be noticed under the order; anything else goes to a standalone motion.

1. Definition gate. Does the order cover sales, transfers or other dispositions of the relevant category, and does that language reach a license? Orders drafted around surplus equipment, vehicles or leases may define the covered assets narrowly. An exclusive AI-training license for a term looks more like a disposition of an interest than a non-exclusive one does. If the wording is unclear, treat the license as not covered.
2. Value gate. Does the total consideration fit within a tier? SourceX agrees one all-in price paid as a one-time payment, so the number is easy to state. Check whether the tier is measured per transaction or in aggregate with related sales. Splitting one license into pieces to stay under a ceiling invites an objection and costs the estate credibility.
3. Exclusion gate. Does the deal touch personally identifiable information covered by a restrictive privacy policy, an insider or affiliate, assets already promised to a stalking horse, or collateral where the lender reserved consent? Any yes sends it to a standalone motion.

How does it apply in common situations?

Drafting the notice when the license fits

When the license runs through the order, the notice is short but public. A few habits keep it clean:

• Name each record set by system and date range, for example helpdesk tickets from 2016 to 2024, and say nothing about the content of individual records.
• Identify the counterparty and any relationship to the debtor exactly as the license agreement does.
• Summarize scope (AI training), term, exclusivity, the agreed de-identification and redaction rules, delivery mechanics and price.
• Confirm that liens attach to the proceeds and say which lender consented.
• State that no data moves until the agreement is executed and the debtor authorizes delivery.

Before any of this, the company has to qualify. SourceX looks for a US business that had 50+ full-time employees at peak (contractors excluded), several years of documented operations and the right to license what it recorded, plus someone empowered to sign, which in chapter 11 is usually the debtor in possession acting under the court's orders. The who qualifies page has the full baseline, and a quick pass through the company fit checker, which is preliminary and non-binding, is worth doing before counsel spends time on the gates.

Disclosure and consent good practice

• Tell estate counsel in writing that you are a SourceX referral 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; the reward becomes payable only after the buyer pays and SourceX receives its fee, and no reward is guaranteed.
• If the estate has retained you as a professional, ask counsel whether the relationship must be disclosed to the court before you register.
• Do not export, upload or describe confidential records yourself. The debtor shares its inventory directly with SourceX once it decides to proceed.

Questions to ask estate counsel

1. Does our order's definition of covered assets reach a license of business records, and an exclusive one?
2. Is each tier measured per transaction or in aggregate?
3. Does the order exclude intellectual property, personal information or insider counterparties?
4. Which consents do the DIP and cash collateral orders require before we serve notice?
5. If someone objects, how quickly can the court hear it?
6. Does the pending sale agreement already cover any of these systems?

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

Next step

If a debtor you advise has an entered de minimis order and years of operating records, run the three gates with estate counsel this week. Then register as a partner and introduce the company, so qualification and the data inventory run while the notice is drafted.