How federal equity receivers sell business assets, and which records can be licensed

The short answer

A federal equity receiver sells business assets under the authority the district court grants in its appointment order, and for significant assets it normally asks the court to approve the sale and the process behind it. A license follows the same logic: if a business inside the receivership estate generated legitimate operating records, the receiver can ask the court to approve licensing them for AI training. Records about investors, victims and claimants sit on the other side of a firm line and should never be part of a license.

Where a receiver's sale authority comes from

Federal equity receivers are appointed by a district court, frequently in civil enforcement actions brought by regulators such as the SEC, to take control of assets connected to the case. A receiver holds only the powers the court gives it, so the appointment order is the first document to read. Orders commonly:

• Define the receivership estate, including entities, subsidiaries and affiliated accounts
• Direct the receiver to take possession of books, records, systems and credentials
• Allow the receiver to operate businesses in the estate, retain professionals and pay expenses
• Set when the receiver may sell or dispose of property, and which transactions need prior approval

Significant sales usually go to the court by motion. Receivers and their counsel also consider 28 U.S.C. 2001 and 2004, the federal statutes on sales of real and personal property under court order, and how they bear on the asset in question. Courts have taken different approaches, particularly for personal property and intangibles, so the sale motion normally explains the procedure the receiver proposes and why. The related question of who can sign a data license for a company in receivership turns on the same order.

How a receivership sale usually reaches approval

1. Secure. The receiver takes control of assets, changes credentials and preserves records, typically in the first weeks.
2. Assess. Each operating business is evaluated for a going-concern sale, a wind-down or a mix of the two.
3. Market. Brokers or auctioneers may be retained with court approval to reach the buyers who value the asset.
4. Move for approval. The motion describes the asset, the marketing, the buyer, the price and any appraisal or publication steps.
5. Notify. The enforcement agency, defendants, lienholders and investors receive notice, often supplemented by the receivership website.
6. Decide. The court hears objections or rules on the papers and enters an order.
7. Close and hold. Proceeds go into the receivership estate for distribution under a court-approved plan.

A records license fits the same seven steps; it simply needs a precise description of the records, the exclusions and the price. Bankruptcy trustees handle leftover assets differently, through end-of-case sweeps described in the guide to remnant asset sales, which makes a useful contrast with the motion-by-motion practice of most receiverships.

Which records a receiver might license, and which never

The line runs between records of real business operations and records about the people the scheme harmed.

Two legal threads support the line. Under the work-made-for-hire rules summarized in the Copyright Office's Circular 30, material employees prepare within the scope of their jobs is generally authored and owned by the employer, which is why a legitimate subsidiary's documents and code can belong to the estate; contractor work may need a written agreement before the estate can rely on it. And where the entity was a financial institution under the FTC's jurisdiction, the Gramm-Leach-Bliley Act requires privacy notices and gives customers opt-out rights before their information is shared with certain nonaffiliated third parties, one more reason investor data stays out.

How this applies in common receivership situations

A quick first pass with the company fit checker shows whether a subsidiary is worth that work; it is preliminary and non-binding. The who qualifies page sets out the full baseline, including several years of documented operations and rights to license the material.

Disclosure and approval good practice

• Present the license by motion, describing data categories and date ranges, never content.
• List the exclusions expressly: investor, victim and claimant data; evidence under hold; client-owned material.
• Describe how SourceX is involved, the single all-in price and the fact that the estate retains ownership of the records.
• Set out the redaction and de-identification commitments, which SourceX agrees with the receiver before any work begins; nothing is delivered without a signed agreement and the receiver's authorization.
• Disclose who introduced the opportunity and any referral relationship.

Receivers are paid through court-approved fee applications, so a receiver should not assume any personal referral reward is permitted. The guide to receiver compensation, court approval and conflicts covers how those questions are usually raised with the court.

For introducers outside the estate, such as the subsidiary's former advisers: 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, and rewards become payable only after the buyer pays and SourceX receives its fee. A reward is never guaranteed and is never deducted from what the estate receives.

Questions for receivership counsel

• Does the appointment order authorize licenses as well as sales, and does either require prior approval?
• Do the procedures in 28 U.S.C. 2001 or 2004 apply, and has this court addressed them for intangible property?
• Which records are under preservation obligations, and can a cleared subset be separated reliably?
• What is the enforcement agency's position on licensing the subsidiary's records?
• Do customer confidentiality terms or privacy notices restrict any of the records?
• How will license proceeds be held and reported in the distribution plan?

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 receivership you are involved in holds a real operating business with years of records, start with the subsidiary rather than the scheme: confirm what exists, separate it from investor data and run the fit check. Professionals and former advisers who want to make the introduction can register as a partner, and the receiver can submit the subsidiary itself through sourcex.si/apply.