D&O tail coverage in a wind-down: keeping records and licensing copies

What does D&O tail coverage do in a wind-down, and why do records matter?

D&O tail or run-off coverage is a policy arrangement that keeps directors and officers insured for claims made after the company stops operating, for wrongful acts alleged to have occurred while it did. When a business closes, the insurer, the broker and the directors usually settle its terms as part of the wind-down checklist.

The link to records is practical. If a creditor, shareholder, regulator or former employee brings a claim years later, the directors defend it with the company's minutes, approvals, financial files and communications. If the systems holding those files were switched off to save money, the defense is weaker.

That same set of systems is what an AI buyer may value. The two interests need not collide, but they need a plan. This is general information, not legal, tax or financial advice. Confirm with your own counsel and your insurance broker before acting.

Can defense preservation and a scoped license coexist?

Yes, if the license covers copies and a defined scope, while originals and a defense set are retained under the retention plan. The company keeps ownership of its data. Data is licensed, not sold, and nothing is binding until the company agrees price and terms and signs.

The structure that tends to work is a three-bucket split.

What to clear before you scope a license

1. The policy conditions. Check the notice, cooperation and records provisions, and ask the broker whether licensing copies matters.
2. The retention schedule. Counsel writes down what must be kept, for how long and by whom.
3. Authority. Confirm who can sign for the company after dissolution or wind-down.
4. Liens and approvals. A lender, court or trustee may need to consent; see private credit lenders taking the keys.
5. Third-party rights. Customer contracts, privacy notices and employee policies may limit what can be licensed.

The statement of financial affairs shows which records a court process asks about, and an examiner's requests show how far back reviewers read. A records custody log documents what was copied, when and by whom.

Which companies are worth raising this with?

SourceX connects companies that hold proprietary operational records with AI labs and data buyers. A company that has already closed can be introduced if the data still exists and it meets the baseline: 50+ full-time employees at peak (contractors excluded), several years of documented operations, rights to license and an authorized sponsor. Depth across many systems and years of history strengthen the case.

Payment is a single all-in amount, typically within about 60 days of invoicing once the buyer selects the data. Closure valuations can be low, as the guide to orderly liquidation value of intangibles discusses, which is a reason to raise a license early rather than after systems are switched off.

The company fit checker is a preliminary, non-binding screen, and who qualifies lists the full baseline.

What to say to the directors

How partner rewards work

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. The reward is paid only after the buyer pays and SourceX receives its fee; an introduction, meeting or signed agreement alone does not trigger payment, and no reward is guaranteed. It is a share of SourceX's fee and is never deducted from what the company receives.

Advisers and licensed professionals should check the rules that apply to them before accepting any referral reward. See the program terms.

When not to pursue a license

• The directors cannot agree on a retention plan.
• The records mainly belong to clients who have not consented.
• The archives were deleted, or nobody can export.
• A court, trustee or assignee controls the assets and has not been involved.

Next step

Agree the defense and statutory sets first. Then register as a partner and introduce the company, or have the authorized sponsor apply at sourcex.si/apply with your referral link.