How to retain an auctioneer or broker for intangibles under Rule 6005

What Rule 6005 requires when an estate hires an auctioneer

Rule 6005 of the Federal Rules of Bankruptcy Procedure requires the order approving an auctioneer's or appraiser's employment to fix the amount or rate of compensation. It also bars officers and employees of the federal judiciary and the Justice Department from serving, and says a residence or licensing requirement does not by itself disqualify an auctioneer. The rule sits on top of the Bankruptcy Code's employment sections; it never works alone.

In practice, three papers travel together: the application to employ, the auctioneer's declaration of disinterestedness and connections, and a proposed order with the commission, any buyer's premium and the expense terms written in. Rule text and forms are revised from time to time, so older form applications may quote superseded wording. Work from the current rule text and your district's local rules, which often add bonding, advertising and sale-report requirements.

How do sections 327, 328 and 330 fit around the rule?

Section 327 lets the trustee employ professionals, auctioneers included, with court approval, provided they hold no interest adverse to the estate and are disinterested. Section 328 lets the court approve compensation terms up front, such as a percentage commission, and section 330 governs the award of reasonable compensation after notice and a hearing.

In a chapter 11 case without a trustee, the debtor in possession generally exercises these employment powers, so the application usually comes from debtor's counsel. A chapter 7 trustee files it directly. The standards are the same either way.

Approval under section 328 is not absolute. The court can revisit terms that prove improvident because of developments nobody could have anticipated when they were fixed, which matters for intangibles whose value is hard to predict at the outset.

Why operational records rarely belong in an auction lot

Records hold their value in their content, and that content carries privacy, confidentiality and rights questions an as-is lot sale cannot manage. Hardware and records should travel separately.

A server lot sold as-is can hand years of email, payroll files and client correspondence to an unknown bidder, which is why liquidators often wipe or destroy drives before sale. The cost of that habit is that records which might have supported a license vanish with the wipe. The fix is sequence: preserve an image or export under counsel's direction, then sanitize and sell the hardware. The guide to forensic imaging of debtor servers and laptops covers how to preserve once and reuse the copy.

A license also lets the estate keep something. Under the Copyright Act, ownership of a work can be transferred in whole or in part, and any exclusive right can be transferred and owned separately (17 U.S.C. 201). That is the legal footing for licensing one use of the records, such as AI training for an agreed term, while title stays with the estate.

Demand for that use comes from a real shortage. Epoch AI's forecast projects that, if current trends continue, language models could fully use the stock of public human-generated text between 2026 and 2032; it is a forecast with wide uncertainty. Records of how real businesses operate, such as tickets, approvals and project histories, are largely absent from the public web.

The content test: license review or auction lot?

Ask one question per asset group: is the buyer paying for what the files say, or for the device they sit on? If the answer is the content, route the group to a license review before anything is wiped.

The last row catches more estates than people expect. Franchisors, agencies and outsourcers often hold records that belong to someone else; the franchisor bankruptcy brief separates system records from franchisee data. Before scoping either route, check how the debtor described these assets in the intangibles section of Schedule A/B.

How should SourceX's fee be disclosed to counsel and the court?

SourceX works on one all-in price that already includes its fee, with no separate charges to the seller, so the estate sees a single figure. Ask SourceX to describe in writing how its fee is built into that price, and hand the description to estate counsel before the approval motion is drafted.

Whether a platform that runs a license process must be employed under section 327, or is simply part of a transaction the court approves on its own motion, is a judgment for estate counsel and the US Trustee, and practice differs by district. Either way, the court should see:

• The all-in price and the fact that SourceX's fee is included in it.
• The scope: the records are licensed, not sold, typically on an exclusive basis for AI training for an agreed term.
• The redaction and de-identification rules, which are agreed before any work begins.
• Every connection between the introducing party, the estate's professionals and SourceX, including any referral arrangement.

If a former owner or insider is also bidding on remaining assets, disclosure matters even more; the page on whether a former owner can buy assets back from a trustee covers the insider issues.

What if the auctioneer is also the introducer?

An auctioneer already employed by the estate who registers as a SourceX partner has created a connection the court and the US Trustee will want to know about. Raise it with estate counsel before making any introduction, file a supplemental declaration if counsel says one is needed, and accept nothing without counsel's sign-off and any court approval the case requires. Some courts may not permit the arrangement at all.

For reference, 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 the reward is payable only after the buyer pays and SourceX receives its fee. It comes out of SourceX's fee, is never deducted from what the estate receives, and no reward is guaranteed.

How an estate introduction runs

1. During the walk-through, note which systems hold records and how far back they go, and tell the trustee or debtor's counsel.
2. With the fiduciary's agreement, introduce the estate through the referral form or a referral link, sharing only basic fit facts such as peak headcount, years in operation and the systems in use.
3. SourceX screens for a US company with 50+ full-time employees at peak (contractors excluded), several years of documented operations, the right to license the records, and an authorized representative, here the trustee or debtor in possession.
4. The estate's team, not the introducer, completes the data inventory; a records inventory folder in the sale data room is a practical home for it.
5. Price and terms are agreed with the fiduciary, and counsel seeks whatever approval the case requires.
6. AI labs and data buyers review; once the agreement is signed and approved, the data is prepared under the agreed redaction rules and delivered, and the estate is paid.

The introducer never exports, uploads or describes confidential records at any stage.

Questions to put to estate counsel

• Does the license need its own motion, and on what notice?
• Is the platform's role an employment under section 327 or part of an approved transaction?
• Does my retention order cover introducing intangibles, or do I need a supplemental declaration?
• Do any privacy policies, client contracts or franchise agreements restrict the records?
• Does a lender's lien on general intangibles reach license proceeds?

This is general information, not legal, tax or financial advice. Bankruptcy practice varies by district and judge; confirm every step with estate counsel and the US Trustee before acting.

Next step

Before the next walk-through, run the debtor through the company fit checker and read who qualifies for a license. If the records pass and counsel clears your role, register as a partner so the introduction is logged properly.