Receivership order language for electronic records and system access

When to use this clause outline

Use it when you draft or revise a proposed order appointing a receiver over a business whose value includes years of digital records. Many form orders still describe books and records in paper terms, and the gaps show up in the first week, when the receiver needs a registrar login, an admin password or a cloud vendor's cooperation.

Receiverships are one of several non-bankruptcy alternatives for handling a distressed business, alongside assignments for the benefit of creditors (Alternatives to Bankruptcy, Law of Commercial Transactions). Because a receiver's powers come from the order and the governing state or federal law, the order's wording carries more weight than in a bankruptcy case, where the Code fills many gaps.

Typical users are a secured lender's counsel seeking a receiver over collateral, counsel for a proposed receiver, and parties in a business-divorce case. Lenders taking control of a borrower should also read what happens to records when private credit lenders take the keys; deadlocked-owner cases raise the separate question of who can approve a license when a custodian is in place.

The clauses

Each clause is an outline for counsel to adapt to the court's form order and local practice. Placeholders appear in braces.

Clause 1: records include electronic systems

Clause 2: domains, identity and administrator control

Clause 3: credential turnover

Clause 4: service providers

Clause 5: preservation

Clause 6: professionals and running costs

Clause 7: authority to license, with court approval

Clause 8: privacy and confidentiality limits

Clause 8 reflects a real enforcement risk. FTC staff have said that a company's promises not to use customer data for undisclosed purposes, such as training AI models, are enforceable whether they appear in a privacy policy, terms of service or marketing materials (FTC staff post, January 2024). A receiver steps into those promises, and the order should not appear to override them.

Clause 9: reporting

How to personalize it

Build the system list for clause 1 and the clause 9 inventory from the accounts payable ledger, corporate card statements and the single sign-on dashboard, not from anyone's memory.

Follow-up timing after entry

1. Day of entry: serve certified copies on the domain registrar, identity provider, email and file host, cloud provider and outsourced IT firm.
2. First week: take over administrator accounts, rotate credentials, suspend deletion policies and confirm each vendor has flagged the account.
3. First month: export or image any system at risk of lapse, and record each step for the initial report.
4. Before any sale, wind-down or decommissioning: assess whether the records could support a license, and if so bring the clause 7 motion.

For a services business being closed, the records question often sits next to the client-contract question covered in selling client contracts when closing a B2B services firm.

What never goes in the order or the motion

• Passwords, keys or account numbers; deliver them through a secure channel instead.
• Contents or samples of confidential records.
• An estimate of license proceeds that nobody has tested.
• The names of prospective data buyers.
• Any typed referral figures. If the receiver or one of its professionals has a connection to SourceX, disclose the connection itself in the way the court requires.

Where a SourceX license fits

A receivership estate can be a fit if the business is a US company that had 50+ full-time employees at peak (contractors excluded), operated for several years with its work recorded across many systems, and holds the rights to the records. The receiver acts as the authorized representative, within the limits of the order. Businesses that are still operating, already sold or wound down can all qualify if the data still exists; see who qualifies or run the company fit checker before the clause 7 motion.

Lender's counsel, turnaround advisors and other non-estate professionals can introduce a receivership as SourceX partners. 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 the reward is payable only after the buyer pays and SourceX receives its fee. A receiver's own compensation is set by the court, so a receiver should not pursue a referral reward without counsel's advice and the court's knowledge.

This is general information, not legal, tax or financial advice. Receivership law differs between state and federal courts and from state to state; confirm every clause with counsel admitted in the appointing court.

Next step

Share this outline with the drafting attorney before the appointment hearing. If you advise the lender or the receiver and expect to introduce the business, register as a partner first so the introduction is recorded.