How to treat intangible assets and records in a chapter 11 liquidation analysis

Why liquidation analyses usually give records no value

In practice, liquidation analyses often carry books and records at zero or leave them out, so check the exhibit in your case. The hypothetical chapter 7 trustee is assumed to collect cash and receivables and sell inventory and equipment, and nobody assumes a buyer will pay for ten years of email, support tickets and deal history.

That assumption made sense when no market existed for operational records. It is less automatic now that AI developers license permissioned business records to train and test systems that carry out real work. Even so, a liquidation analysis should not book that value on hope. The useful question for a financial advisor is narrower: what evidence would justify any recovery line for records, and how conservative should it be?

What the liquidation analysis is testing

The liquidation analysis is the disclosure statement exhibit that supports the best-interests test. In general terms, and as the Bankruptcy Code's confirmation standards are usually described, that test asks whether each creditor in an impaired class that does not accept the plan would receive at least as much under the plan as in a hypothetical chapter 7 liquidation. Plan counsel will confirm the exact standard and how your court applies it.

Intangibles cut both ways:

• If the hypothetical chapter 7 assumes value for records that the plan does not capture, the plan has a harder comparison to clear.
• If the plan captures value from records that the liquidation analysis ignores, plan recoveries look better than a like-for-like comparison would show.

For a creditors' committee advisor, a third pattern deserves the closest look: a plan or sale that hands records to a purchaser or the reorganized debtor without allocating any value to them.

How intangible assets usually appear in the analysis

Advisors commonly show a low and a high recovery estimate for each asset class, with notes explaining the assumptions. Intangibles get a number when someone can point to a buyer and a way to transfer the asset.

The last row is where the evidence gap sits. In a going-concern sale, records travel with the business and their value is buried in the enterprise price. On a liquidation premise they are stranded unless someone can still export them, the estate has the right to license them and a counterparty process exists.

The evidence ladder for a records recovery line

Let the strength of the evidence, not optimism, decide what appears in the low and high cases.

The caution has a simple basis. No license binds anyone until the estate agrees price and terms and signs, buyers may pass, and payment arrives only after a buyer selects the data, typically within about 60 days of invoicing. An analysis that leans on unsigned licensing proceeds invites an objection it deserves.

Why the chapter 7 premise cuts record values further

Even where records could be licensed, a hypothetical chapter 7 tends to destroy the conditions that make them licensable:

• SaaS subscriptions lapse when nobody pays them, and the vendor's own retention terms then decide what survives.
• The people with admin rights leave, and the knowledge of where archives live goes with them.
• A trustee facing storage bills may move to abandon and destroy the records.
• Customer personal information carries its own limits. Where the debtor's privacy policy, in force at filing, prohibited passing personally identifiable information to unaffiliated persons, section 363(b)(1) of the Bankruptcy Code allows a trustee to sell or lease it in only two ways: on terms that honor the policy, or with court approval following the appointment of a consumer privacy ombudsman, notice and a hearing.

So a defensible analysis can assume records lose value quickly in chapter 7 even when the plan preserves them. State that difference explicitly, because it is part of the case that the plan beats liquidation. The same reasoning drives the no-asset report decision in a chapter 7 business case. If the plan itself authorizes destruction, see how books and records provisions in chapter 11 plans can carve out an assessment window.

Why AI developers pay for business records at all

The demand comes from a change in what AI systems are built to do. AI work is shifting from systems that answer questions toward agents that carry out tasks end to end. Building and testing those agents takes examples of real work, meaning the steps, decisions, tool use and results, and that material lives inside companies rather than on the public web. Epoch AI's researchers estimate that on current trends, training runs would use up the effective stock of public human-written text at some point between 2026 and 2032, with wide uncertainty around that range.

Treat that as market context, not evidence of value for any particular estate. It belongs in the narrative, never in the numbers.

Which estates are worth checking

Most estates will not qualify, and saying so early saves fees. A debtor deserves a records check when it meets the who qualifies baseline:

• A US company that had 50+ full-time employees at peak, contractors excluded
• Several years of documented operations, ideally spread across many systems such as email, chat, file shares, CRM, finance, support and engineering tools
• Records the debtor created about its own work, not client-owned material held under an outsourcing or agency contract
• Data that is not mainly consumer personal information or protected health information
• Archives that still exist, and someone who can still export them
• A fiduciary with authority to sign: the debtor in possession, a chapter 11 trustee or, after the effective date, a liquidating trustee or plan administrator

For a first pass that asks for no contact details, the company fit checker gives a preliminary, non-binding answer.

What to ask the debtor's financial advisor

Those four questions fit in one call and tell you whether a records line is worth more work. In lender-driven cases the answers depend on who now controls the systems; see what happens to records when private credit lenders take the keys. If a sale is moving the records to a buyer for nothing, the same questions support an objection to a 363 sale that undermarkets intangible assets.

How a licensing route runs once an estate is introduced

1. An advisor makes the introduction through a partner referral link or the referral form, or the estate applies on its own.
2. SourceX reviews headcount history, years of operations, the spread of systems and the estate's rights to the records.
3. The estate completes a data inventory: which systems exist, how many years each covers and what can be exported.
4. SourceX and the estate agree one all-in price and the license terms, typically exclusive for AI training for an agreed term. Estate counsel decides whether the license needs court approval.
5. The opportunity is shown to AI labs and data buyers; when the estate is deal-ready, expect responses within about two weeks.
6. The license is signed, the records are prepared under redaction and de-identification rules agreed in advance, delivery follows, and the estate is paid.

The estate keeps ownership throughout. Records are licensed, not sold.

Rewards for advisors who make 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, and rewards become payable only after the buyer pays and SourceX receives its fee. The reward comes out of SourceX's fee, never out of estate proceeds, and no reward is guaranteed.

Committee and estate professionals work under retention orders that require disclosure of connections and compensation. Read your order and talk to counsel before registering for a reward connected to any matter you are retained in. The estate can always apply directly instead.

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 in one of your cases passes the screen above, register as a partner and make the introduction, or ask the debtor in possession or trustee to apply directly at sourcex.si/apply. Do it before the effective date, while someone can still run an export.