Books and records questions on the statement of financial affairs

What does the statement of financial affairs ask about books and records?

The statement of financial affairs for a non-individual debtor (Official Form 207) asks who kept the company's books, who audited or reviewed them, who holds them now, and who received financial statements. The answers name people and vendors, which makes them a ready-made map of where years of operational records sit.

Counsel completing the form under penalty of perjury treat it as a disclosure exercise. Read the same answers as a records inventory and you can see, before any call to the company, which archives probably exist and who controls access. Use the current official form and its instructions rather than a summary, including this one.

Reading the books-and-records questions as a map

The form's business-details section asks, in substance, for the accountants and bookkeepers who maintained the books during a look-back period before filing, any firms that audited or compiled the books, the person or firm now in possession of the books and records (with an explanation if they are not available), and the parties given financial statements.

Why trustees and examiners read these answers first

A chapter 7 trustee, a chapter 11 trustee or an examiner needs to find the records before anything else. The form answers are the quickest route, and they are sworn. Where an answer says the records are with a vendor, the next step is a preservation letter, not a licensing conversation.

The records question also affects value. Lenders and appraisers rarely credit operational archives with much worth in a liquidation analysis; see how records are appraised. A documented route to a license is new evidence, but it needs the archives to exist and be reachable first.

The four-holder test for licensable archives

Use this screen on each answer before anyone talks to a SourceX contact:

• Holder identified: a named person or firm confirms they have the records, not just the ledgers
• Hold in place: a preservation notice or standstill covers the holder, so nothing is purged
• Hands-on access: someone with admin rights can run exports, or the vendor agrees to in writing
• Hold rights clear: the holder is a custodian, not an owner; vendors and bookkeepers generally do not own the company's records, but contracts and liens can complicate access

If the first two items are not true, fix those. Do not skip to licensing.

From form answers to a records inventory

The sworn answers rarely list every system, so build outward from them. A bookkeeper implies accounting software, bank feeds and an invoice archive. An outsourced IT provider implies email, file shares, backups and admin credentials. A named payroll or CRM vendor implies HR and customer records.

1. Copy each named holder from the form into a custody table with contact, systems and date of last known access.
2. Add vendors from the bank and card statements; the guide to finding cloud accounts covers that step.
3. Record where each archive sits and who authorizes release.
4. Mark each line as preserved, at risk or unknown.
5. Log every handoff in a custody record such as the records custody log.

Keep the table as a working list. The estate representative holds authority, so the partner role is limited to an introduction and basic fit information.

How the answers connect to a SourceX fit check

SourceX looks for US companies with 50+ full-time employees at peak (contractors excluded), several years of documented operations, rights to license the data and an authorized sponsor. A debtor or a wound-down company can qualify if the data still exists. In an estate, the authorized sponsor is typically whoever has authority to bind the debtor or estate, which counsel confirm; the court may need to approve.

When secured creditors are involved

A lender that took the keys may have control over the same archives. The private credit lender guide shows how control affects who can approve, and the section 506(c) surcharge guide looks at who pays to preserve collateral that includes records.

When not to bother

Skip the licensing angle when the form shows a company far below the size baseline, when the archives are held by an unrelated party who has not consented, or when the only data is consumer personal information with no licensing basis. In those cases the form is still useful for the estate, but a records license adds nothing. A company that is deal-ready can draw buyer responses in about two weeks, so only bring forward candidates where the records are reachable now.

What to say to a holder

That message asks for facts, not records. Never ask anyone to send confidential content to a partner.

This is general information, not legal, tax or financial advice. Confirm with your own counsel before acting.

Next step

Take the sworn custody answers and run the company fit checker for a preliminary, non-binding view, and compare with the who qualifies baseline. If it looks promising, register as a partner and introduce the company, or have the authorized sponsor apply directly at sourcex.si/apply.

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. Rewards become payable only after the buyer pays and SourceX receives its fee, and no reward is guaranteed. Check your own court and professional rules first.