How a trustee notice of intent to sell property works, including for a records license

What a notice of intended sale does

A notice of intended sale lets a chapter 7 trustee sell estate property without a courtroom hearing unless a creditor or another party in interest objects by a stated deadline. The trustee files the notice, serves the creditor matrix, the US Trustee and anyone who asked for notice, then waits. If the deadline passes quietly, the sale goes ahead on the noticed terms; some districts then want a short order, while others treat the unopposed notice as enough.

Practitioners call this negative notice because silence works as consent. It exists because most estate sales are small and uncontested: a vehicle, a domain name, leftover inventory, a claim sold back to the debtor's principals. Districts build the route through local rules and local forms, and many cap the value of property that can be sold this way. Ceilings, service lists and response periods differ between districts, so your own local rules and US Trustee region guidance govern, not a form borrowed from another court.

How the negative-notice route works, step by step

The sequence below is the common pattern. Your district's forms decide the details.

1. Confirm the asset and the route. Check that the property belongs to the estate, is not exempt or fully encumbered, and falls within what your local rule allows to be sold on notice.
2. Settle terms with the buyer. Price, as-is language, any overbid procedure, payment timing and exactly what passes to the buyer.
3. Draft the notice on the local form. Describe the property, the buyer, the price and terms, any relationship between the buyer and the debtor or its insiders, the objection deadline and where objections are filed and served.
4. Serve it and file proof of service. Creditors, the US Trustee, the debtor and its counsel, lienholders and parties who requested notice.
5. Let the objection window run. No objection means you proceed as the local rule directs. An objection sends the matter to a hearing, where the trustee can defend, adjust or withdraw the sale.
6. Close and report. Collect the funds, deliver the property and reflect the sale in interim reports and the final report.

The federal bankruptcy rules also set a minimum notice period for sales outside the ordinary course of business, which a court can shorten for cause. Build that period, plus any extra days your local rule adds for service by mail, into the case calendar before promising a closing date to a buyer.

Can a records license be noticed the same way?

Sometimes. The answer turns on your local rules and on personal data. Section 363 of the Bankruptcy Code is the trustee's authority to use, sell or lease estate property outside the ordinary course after notice and a hearing. A license of the debtor's business records for AI training sits between a use and a lease: the estate keeps ownership and grants defined rights for an agreed term in exchange for a one-time payment. Whether your district's notice procedure covers a license, and how a value ceiling applies to a license fee, are questions for the trustee's counsel. When the answer is unclear, a short motion is the cautious choice.

Personal data is the bigger fork in the road. Under section 363(b)(1), if the debtor's privacy policy in effect when the case began prohibited transferring personally identifiable information to unaffiliated persons, the trustee may not sell or lease that information unless the transfer is consistent with the policy, or the court approves it after a consumer privacy ombudsman is appointed, notice and a hearing are held, and the court finds no showing that the sale would violate applicable nonbankruptcy law. Under section 332, the court orders the US Trustee to appoint that ombudsman no later than 7 days before the hearing. A silent negative notice cannot satisfy a provision that requires a hearing, so records holding covered personal information need a motion, or need that information removed before anything is licensed.

These reviews have teeth. In 23andMe's 2025 bankruptcy, the consumer privacy ombudsman recommended that customers' genetic and personally identifiable data not be transferred without renewed opt-in consent. Most business records SourceX looks at are far less sensitive, such as support tickets, engineering history and internal documents, but they still carry names and contact details. De-identification and redaction requirements are agreed with the estate before any work begins. The consumer privacy ombudsman guide covers that process in more depth.

What a records-license notice should disclose

Write the notice so a creditor can judge what leaves the estate without seeing a single confidential record.

When a records license is worth the trustee's time

Most chapter 7 estates will never hold records worth licensing. The ones that do share a profile, and a trustee can test it in one call with the debtor's former controller or IT lead.

The estate screen, in four questions:

• Scale: was the debtor a US operating business with 50+ full-time employees at peak (contractors excluded) and several years of documented operations?
• Survival: do the records still exist in a tenant, backup or export someone can open, with working admin credentials?
• Ownership: did the debtor create the material, rather than hold it for clients under contracts that forbid reuse?
• Sensitivity: is the material mainly business records rather than consumer personal data or protected health information, and has it never been licensed for AI training before?

Four yes answers justify a preliminary pass through the company fit checker, which asks for no contact details and is not a decision, and a look at the who qualifies baseline. If systems are about to be switched off, the question of whether to keep the business running briefly under section 721 may come first. And where the trustee is still choosing between an asset case and a no-asset report, surviving records are one input worth weighing.

How the license runs alongside the case

The sequence mirrors a normal SourceX engagement with court steps added. Nobody outside the estate touches a record before an agreement is signed.

1. Introduction. An estate professional, creditor or former executive introduces the case to SourceX through the referral form or a referral link, or the trustee applies directly.
2. Qualification. SourceX reviews size, history, breadth of systems and rights with the trustee as the authorized representative.
3. Inventory. The trustee's IT contact lists each system, the years it covers and what can be exported. Descriptions only, no content.
4. Terms. SourceX and the trustee agree price and license terms, conditioned on whatever notice or approval the court requires.
5. Buyer review. AI labs and data buyers assess the opportunity; once it is deal-ready, they typically respond within about two weeks.
6. Notice or motion. The trustee files the negative notice or a motion with the agreed terms and lets the objection period run.
7. Delivery and payment. After approval and signature, data is prepared under the agreed redaction rules and delivered, and the estate is paid.

If the remaining estate assets are headed for an end-of-case sweep, exclude the records from it by name; the guide to remnant asset sales explains why.

Rewards and the trustee's position

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. No reward is guaranteed, and because the reward is a share of SourceX's fee, it never reduces what the estate receives.

A trustee stands in a different position from an outside introducer. Trustee compensation is fixed by statute and approved by the court, so a trustee should assume a personal referral reward tied to estate property is unavailable unless counsel and the court say otherwise; the page on whether a referral reward should go to the estate sets out the questions to ask. Anyone else who makes the introduction should disclose the arrangement so it can appear in the notice.

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 current case involves a debtor whose records are still reachable, run the fit check before systems go dark. Estate professionals and creditors making the introduction can register as a partner; a trustee acting for the estate can apply directly at sourcex.si/apply.