Chapter 15 and US insolvency: who controls a US subsidiary's records?

Who controls a US subsidiary's records in an insolvency?

It depends on the type of proceeding: in some cases the company's own management stays in control, in others a trustee, an assignee or a court-supervised process takes over, and a foreign insolvency does not by itself decide who controls US assets. Whatever the route, anyone discussing a data license needs the person or court with real control involved first. This is general information, not legal, tax or financial advice.

For a referral partner the practical rule is simple. SourceX needs an authorized sponsor and clean rights. If a court, trustee or assignee controls the assets and has not been involved, the company is not ready to be introduced.

How do the main US routes shift control?

The federal judiciary's Chapter 11 basics page explains that Chapter 11 generally provides for reorganization and that the debtor ordinarily remains in possession as debtor in possession. In a Chapter 7 case a trustee is appointed to liquidate the estate. A plan in Chapter 11 may also be liquidating, so the label does not settle who is in charge on a given day.

What is Chapter 15 and why does it matter to a foreign group?

Chapter 15 is the part of the US Bankruptcy Code that addresses cross-border cases. For a foreign group with a US subsidiary, a foreign administrator or liquidator may ask a US court to recognize the foreign proceeding. Whether that happens, and what powers follow, is a matter of US law and the court's orders, so the answer comes from US insolvency counsel, not from this page.

Two points help non-US practitioners.

• A foreign appointment does not automatically give you authority over US-held assets. Check what the US court has recognized and what relief it has granted.
• A separate US entity may have its own officers, its own creditors and its own filing status, even when the parent is in insolvency elsewhere. See the guide for administrators with a US subsidiary in the estate.

How do assignments for the benefit of creditors work?

An assignment for the benefit of creditors, or ABC, is a state-law alternative to bankruptcy. A textbook explanation on alternatives to bankruptcy describes the debtor, as assignor, transferring its assets to an assignee who holds them in trust, liquidates them and distributes the proceeds to creditors.

Rules differ by state. Florida's statute, for example, sets out a uniform procedure supervised by the circuit court; the Florida Statutes chapter on ABCs states its intent to administer insolvent estates, keep creditors informed and distribute assets by priority. Other states differ, so check the statute and procedure in the relevant state.

What does this mean in practice for a records license?

Use the table to see who must be at the table before you mention SourceX.

Consumer privacy adds a further layer where records contain personal data: section 363 of the Bankruptcy Code limits the sale or lease of personally identifiable information that a debtor's privacy policy said it would not transfer, unless the sale fits the policy or a court approves it after a consumer privacy ombudsman is appointed. Such datasets are generally a poor fit. Red flags in the program include assets controlled by a court, trustee or assignee that has not been involved, mainly consumer personal data, and data that belongs to someone else.

Confirm with your own counsel before acting.

Questions to ask US insolvency counsel

• Who has authority today to license or sell the company's records?
• Does a license outside the ordinary course need court or creditor-committee approval?
• Are there privacy policies, customer contracts or confidentiality terms that restrict transfer?
• If the records are licensed, who receives the proceeds and how are they reported?
• Does the exclusivity SourceX deals usually require affect other asset sales?

Where a referral partner fits

You make an introduction and give basic fit information; you never export, upload or describe confidential records. SourceX qualifies the company on size, history, data breadth and rights, and nothing is binding until the company, with any required approvals, agrees price and terms and signs. The company needs 50+ full-time employees at peak (contractors excluded) and several years of documented operations, as set out on the who qualifies page.

For payment reporting by non-US partners, see the Form 1042-S explainer and the W-8BEN-E guide. Partners earn 25% of the eligible platform fees SourceX actually collects, capped at $100,000 per referred company, paid only after the buyer pays and SourceX receives its fee. Court-appointed professionals should confirm with counsel whether a reward may be accepted. Use the referral earnings calculator and the program terms for detail, and read the guide on closing a US subsidiary for the non-insolvent case.

Next step

If the person with control is identified and willing, register as a partner and make the introduction.