How to choose an ABC assignee: the data and records questions to ask before you sign

The short answer

Choose an assignee for an assignment for the benefit of creditors (ABC) the way you would choose a chief restructuring officer: interview several, send each the same written questions, and judge them on independence, experience in your state and sector, fees, and a concrete plan for the company's software and data. The data plan is the part boards most often skip, and it decides whether the company's records survive long enough to be worth anything to creditors.

In an ABC, the company (the assignor) transfers its assets to an assignee, who holds them in trust, liquidates them and distributes the proceeds to creditors, as this open textbook on alternatives to bankruptcy explains. State law governs the process and it varies: Florida, for example, sets out a statutory procedure in chapter 727 supervised by the circuit court, with rules on claim priority and the assignee's final report. Other states rely more on common law. This is general information, not legal, tax or financial advice. Confirm the procedure in your state with company counsel before acting.

What to prepare before you interview candidates

A short pack of facts makes every interview sharper and lets candidates give real answers instead of generic ones.

• A board resolution authorizing the process, and company counsel engaged to run it
• A system list: every tool, its admin login, renewal date, monthly cost and how many years of history it holds
• Current and past versions of the privacy policy and customer terms
• Contracts that mention data: customer agreements, vendor data processing terms, contractor and consultant agreements
• Headcount history, including the peak number of full-time employees (contractors excluded)
• The secured lender's contact and its likely position on intangible assets

The ownership and permission questions for company system records help you fill the contracts and rights part of this pack.

How to choose the assignee, step by step

1. Confirm the route. Ask counsel whether an ABC suits your company and state, and what court involvement, notice and timing your state requires.
2. Build a shortlist. Pick two to four professional assignees who have handled ABCs in your state and sold assets similar to yours, including software, code, domains or customer contracts.
3. Send identical written questions. Include the data and records questions in the table below so answers can be compared side by side.
4. Interview the person who will run the estate. The business-development partner who pitches may not be the one who decides when servers are wiped.
5. Compare fee proposals and budgets. Look for a budget line that keeps email, CRM, finance and engineering systems alive until the inventory is done.
6. Check independence. Ask about relationships with insiders, the secured lender and likely buyers, and how conflicts would be handled.
7. Agree a records plan before the assignment date. Write down who receives admin credentials, which subscriptions continue and for how long, and which exports happen before anything is shut down.
8. Sign with the plan in the file. Execute the assignment with the records plan attached to the engagement terms or board minutes.

The data and records questions to ask every candidate

An assignee open to licensing does not need to commit to anything. SourceX works only with the person who controls the assets, nothing binds the estate until it agrees a price and terms and signs, and the estate keeps ownership because the data is licensed, not sold. For why buyers want these records at all, read why AI buyers want records from closed and closing companies.

Rights questions you can answer before the assignment

The board can resolve two rights questions now, while people who know the answers are still employed.

First, who owns the content. Under the Copyright Office's guidance on works made for hire, work an employee prepares within the scope of employment belongs to the employer, while material from contractors generally does not unless it falls in a listed category with a signed work-for-hire agreement or has been assigned in writing. Pull the contractor and agency agreements so the assignee knows which records are clearly the company's.

Second, what the company promised. FTC staff have cautioned that quietly adopting more permissive data practices, such as using consumer data for AI training, through a retroactive change to terms or a privacy policy may be unfair or deceptive. Do not rewrite the privacy policy on the eve of the assignment; give the assignee every historical version instead.

Common mistakes boards make

Example: a records plan in practice

Illustrative and fictional: Northfield Route Software, a scheduling software company that peaked at 85 full-time employees, decides on an ABC after a failed financing. The board interviews three assignees with the same questions. One proposes cancelling every subscription on day one; another has never sold anything but equipment. The board chooses the third, whose proposal budgets read-only plans for the email tenant, help desk and code repositories for several months and names who receives credentials.

After the assignment, the assignee runs exports, keeps redaction rules ready and screens the records with SourceX. Whether a license follows depends on buyer review and the terms the assignee accepts. The point is that the option still exists, because the systems were still running when someone asked.

Next step

Before the board votes, test the company in the company fit checker and compare it with who qualifies, which asks for 50+ full-time employees at peak (contractors excluded), a multi-year operating record, the right to license and someone authorized to sign. To understand where any proceeds go, read who gets the money from a data license in a bankruptcy or ABC. Advisers can register as a partner and use the introduction email templates for assignees and trustees; owners can apply directly at sourcex.si/apply.