Orderly liquidation value of intangibles: how records are appraised

What is orderly liquidation value for intellectual property?

Orderly liquidation value (OLV) is the estimated gross amount an asset would fetch in a sale held over a reasonable marketing period, with the seller motivated but not forced. Forced liquidation value (FLV) assumes a rushed sale, such as an auction on short notice. For intangibles, OLV and FLV both start from the premise that the business has stopped operating.

Operational records are the awkward case. A typical appraisal credits trademarks, patents, software and customer lists where there is a buyer and evidence of price. Email archives, ticket histories and internal documents are usually valued at little or nothing, because no market evidence is on file. This page explains the premises and what evidence could change that view.

OLV versus FLV versus going concern

The auction guide shows how forced sale conditions work for domains, code and records.

How appraisers approach different intangibles

Appraisers pick a method that matches the asset and the evidence they can document.

1. Market approach: price from comparable sales. Strong for domains and some patents, weak for internal records because sales are private.
2. Income approach: discounted cash flows from the asset. Requires a revenue stream a buyer could realistically earn.
3. Cost approach: what it would cost to recreate the asset. Rarely meaningful for historical email or chat.
4. Relief-from-royalty: the royalty a buyer would avoid by owning the asset. Used for brands and technology.

Most records do not fit any of these cleanly, so appraisers either exclude them or assign a nominal figure.

Why operational records are usually valued at little or nothing

Three reasons come up repeatedly.

• No visible buyer pool. There is no established public market with posted prices for another company's email and ticket history.
• Rights uncertainty. Records may contain client, employee or consumer information that limits transfer.
• Access risk. Records can disappear when subscriptions lapse or staff leave, so a lender cannot assume they survive a liquidation.

None of this means records are worthless. It means a conventional appraisal lacks evidence.

What evidence could change an appraiser's view

An appraiser can weigh facts, not hopes. The sort of evidence a lender can assemble includes:

SourceX deals are licenses where the company keeps ownership, typically exclusive for AI training for an agreed term, at one all-in price. Nothing is binding until the company agrees price and terms and signs. After a company is deal-ready, buyers typically respond within about two weeks. None of this sets an appraised value, and a lender should not assume one.

What a secured lender can do with that

Secured lenders have a few practical moves, each of which stays on the right side of an appraisal.

• Ask the borrower for a system list and years of history before the field exam, not after a default. The statement of financial affairs guide shows the same questions after filing.
• Keep records out of the borrowing base unless documented evidence supports a value.
• Add a covenant to preserve exports of key systems before any shutdown.
• If you take control of collateral, see what happens to records when private credit lenders take the keys, then consider a licensing introduction as a way to test the market.
• Where preserving collateral costs the estate money, look at the section 506(c) surcharge.

Questions to ask an appraiser

• Which intangibles are in the OLV scope, and are operational records listed or excluded?
• What market evidence supports each value, and what happens if none exists?
• Does the report assume the records survive, and who funds hosting?
• Are third-party and personal data carved out?
• Is any licensing evidence given weight, and how is it documented?

This is general information, not legal, tax or financial advice. Confirm with your own counsel and valuation professional before relying on any figure.

An Illustrative lender walk-through

Illustrative: a fictional lender holds a blanket lien on a 140-person IT services borrower that is winding down. The appraiser's OLV report lists the brand, a small software tool and a customer list. The ten years of service tickets, project files and internal chat are not listed.

The lender's workout officer asks the borrower's controller for a system list and finds eleven systems, most with eight or more years of history, and a retained administrator. Counsel confirm the borrower created the records and that client contracts do not bar licensing. The officer then asks the appraiser to note the documented route as a subsequent-event consideration, without a number attached. The appraiser keeps the records at nominal value in this report, but the lender now has a path to test the market before shutdown.

Limits of this approach

Do not use a licensing introduction to argue for a higher collateral value in a dispute. It will not help if the records are mostly consumer personal data, protected health information without authorization, or material that belongs to someone else. It also does not help if the archives were deleted or nobody can export them.

Next step

If a borrower or foreclosed company has 50+ full-time employees at peak (contractors excluded), years of records and a person with authority to sign, run the company fit checker and read who qualifies. Then register as a partner to make an introduction, or have the authorized sponsor apply at sourcex.si/apply.

Partners earn 25% of the eligible platform fees SourceX actually collects, capped at $100,000 per referred company, payable only after the buyer pays and SourceX receives its fee; no reward is guaranteed. Lenders should check their own policies and regulator rules on referral fees first. The examiner guide is useful if an investigation is also running.