Chapter 7 trustee first week in a business case: a records and systems checklist

Why records need their own first-week checklist

In a corporate chapter 7 where operations have stopped, the assets that disappear fastest are digital. Cloud subscriptions renew or lapse on monthly cycles, company cards on file get cancelled, former administrators keep or lose access unpredictably, and retention policies go on deleting mail and chat whether anyone is watching or not. A desk or a server rack will still be there next month; a Microsoft 365 tenant whose bill went unpaid may not be.

Those systems matter twice over. They hold the books and records the trustee needs to administer the case and investigate claims, and for a company that had 50+ full-time employees at peak (contractors excluded) they can be an asset in their own right, licensable to AI developers through SourceX. The checklist below is ordered by how quickly each item becomes impossible to fix.

The first-week checklist

Day 1: premises, devices and the keys to everything

• Take control of the premises, server room and any colocation space; change locks and building access cards.
• Collect laptops, phones, external drives and backup media, log each item, and stop any wiping or resale.
• Identify the super-admin accounts for email and collaboration (Google Workspace or Microsoft 365) and for the identity provider, then change their passwords and recovery details.
• Secure the domain registrar and DNS accounts, since email routing and every password reset depend on them.
• Remove access for departed staff, outside contractors and the former owners, keeping a log of who had what.

Days 2-3: stop the automatic deletion

• Suspend retention and auto-delete policies on mailboxes, chat, shared drives and ticketing tools.
• Turn off scheduled deprovisioning that removes a departed user's mailbox or drive after a set period.
• Ask each critical vendor how long data survives after non-payment or cancellation, and get the answer in writing.
• With counsel, send preservation notices to vendors and outside custodians where the case calls for it.

Days 3-4: find every system and custodian

• Pull company card statements, the accounts payable ledger and bank activity to list every software subscription.
• For each system, note what it holds, how many years it covers, its renewal date, its monthly cost and who can administer it.
• Ask the outside bookkeeper, payroll provider, managed IT provider and any offshore team what company data they hold.
• Locate archives of retired systems: old ticketing tools, legacy file servers, exported backups.

Days 4-5: find who can export

• Identify a former IT lead or engineer who knows the systems and could help on terms your counsel approves.
• Test one export from a core system to confirm the data is complete and readable.
• Decide which subscriptions must stay paid, and for how long, to keep the estate's options open.

Before the 341 meeting

• Add records questions to your outline for the debtor's representative: systems used, years of history, archives, admin credentials, the privacy policy and customer contracts with data clauses.
• Note whether the records include personal data, health information or recorded calls.
• Run the company through the company fit checker, a preliminary, non-binding screen that needs no contact details.

How to use the results

Two legal points come up most often. Health information can be used only within HIPAA's rules; HHS describes the two recognized de-identification methods, Expert Determination and Safe Harbor, after which the data is no longer protected health information. For call recordings, the federal Wiretap Act at 18 U.S.C. 2511 generally permits recording where one party to the call consents, but some states require every party's consent, so the notices callers heard matter.

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

Red flags that end the records question early

• The data mainly belongs to the debtor's clients, as with an outsourcer or agency, and they have not consented.
• The records are mainly consumer personal data with no basis for licensing.
• Archives were deleted before the petition, or nobody can export what remains.
• An earlier deal already licensed these records for AI training.
• A buyer in an earlier sale took exclusive rights to the systems.

If the case arrived by conversion, read what happens to a pending deal when chapter 11 converts to chapter 7; where a trustee is appointed in a chapter 11 case instead, see who controls the records once a chapter 11 trustee is appointed. Venture-backed debtors raise their own issues, covered in startup shutdowns in 2026, and buyers of what remains can use buying a company out of bankruptcy.

Next step

If the checklist turns up live systems and a company that meets the who qualifies baseline, the estate can apply directly at sourcex.si/apply. A trustee acts as a fiduciary for the estate, so any referral relationship is a question for your own rules and the court, and a trustee may prefer to have the estate apply without any referral arrangement at all. Professionals who work around these cases and want to make introductions in other matters can register as a partner after checking their own retention and disclosure rules.