Preserving data assets in an assignment for the benefit of creditors

Why data assets are fragile at the start of an ABC#

Data assets are fragile at the start of an ABC because the people and payment methods that keep systems running disappear at the same moment. Employees leave, company cards are cancelled, and SaaS vendors start their own non-payment processes, which can end in suspended accounts and deleted data.

The assignee usually inherits a list of systems without the people who understood them. Admin passwords sit in a departed engineer's password manager, multi-factor codes go to a disconnected phone, and the one person who knew which shared drive held the customer contracts has moved on. None of this is malicious, and all of it reduces what creditors can recover.

What the company should do before signing the assignment#

The company should complete a records handover before signing the assignment, while it still has staff and budget. The aim is to give the assignee a working inventory and working access from the first day of control.

A spreadsheet is enough. What matters is that each row names a system, a person who can still answer questions about it, and the date on which access or billing will lapse.

• 1List every system that holds records: name, owner, plan, renewal date and payment method.
• 2Move admin credentials and multi-factor recovery to an account the assignee will control.
• 3Note each vendor's terms on suspension, deletion and post-termination export.
• 4Flag records under a legal hold, in open litigation or subject to a regulator's request.
• 5Name a former employee or contractor who can be retained to run exports.
• 6Record known restrictions: customer contracts, privacy policies, employee notices and lender liens.

Preservation checklist by system type#

Preservation differs by system type, because each system loses different things when it is cancelled. The table shows what to export and where standard exports tend to fall short.

Verify each export against the live system before cancelling: compare record counts, open a sample of old and recent items, and confirm that attachments open. An unverified export is a hope, not a record.

Deciding which subscriptions to keep paying#

Deciding which subscriptions to keep paying comes down to one rule: keep a system live only while its records cannot be exported faithfully, or while a buyer may need to see them in place. Every other system is exported, verified and cancelled.

Many vendors offer lower tiers, read-only modes or archive options that cost less than a full plan, and some will extend access if asked directly, especially when the alternative is an unpaid account. The assignee weighs that cost against what the records could bring to creditors and writes the decision down so it can be explained later.

Authority and privacy questions to settle early#

Authority and privacy questions decide whether preserved records can ever produce value, so the assignee settles them alongside preservation rather than afterward.

On authority, the assignee confirms that the assignment transfers all assets, including intangible property and books and records, and checks whether state law requires a filing or court approval for a sale or license. Secured lenders with liens on general intangibles need to be identified early, since their consent or payoff shapes any transaction.

On privacy, the assignee reads the privacy policies in force across the years the records cover, customer agreements with data-use or confidentiality clauses, and any employee notices about workplace communications. Which laws may apply is assessed with counsel for the specific records and people involved.

Where data licensing fits in an ABC#

Data licensing fits in an ABC as one more possible way to turn assets into creditor recovery. The buyer of a company's equipment, brand or customer contracts is often a different party from an AI developer interested in licensing historical support, engineering or operations records.

A non-exclusive license of de-identified records can run in parallel with the sale of other assets. ABCs are designed to move quickly, so the assessment starts with metadata during the first review of assets, and license terms avoid obligations that would outlast the assignee's work.

Sequence matters when the same records touch both deals. If the buyer of the operating assets needs order or service history to run the business, the asset purchase agreement should say whether those records transfer, stay with the estate or are licensed back, and any data license should be disclosed to that buyer before closing.

Illustrative: an assignee preserves a contract manufacturer's quality records#

Illustrative: a fictional contract manufacturer of industrial pump assemblies, with about 180 employees at its peak, makes an assignment for the benefit of creditors after its largest customer cancels two programs. Orders and production ran on Epicor, nonconformance reports and corrective actions lived in a separate quality management system, warranty claims came in through a service desk, and engineering change discussions sat in shared Outlook mailboxes.

Before signing, the plant controller lists each system with its renewal date and payment method and moves admin access to an account the assignee will control. The quality system's contract allows only a short export window after termination, so the assignee pays one more month and retains the former quality manager as a contractor to export every nonconformance and corrective action with attachments and check the counts. Epicor stays on its current plan until order histories are extracted with the order numbers that link them to the quality records.

The assignee sells the equipment, inventory and customer contracts to a competitor. Drawings and specifications owned by customers are returned or transferred with the customer files, and export-controlled work for one customer is excluded entirely. Separately, the assignee licenses de-identified nonconformance, corrective action and warranty records on a non-exclusive basis. Both transactions appear in the assignee's report to creditors.

How SourceX supports assignees#

SourceX works with assignees through the SourceX five-step transaction: Supply, Rights, Preparation, Approval and Delivery. The first assessment needs only metadata about systems, record families and restrictions, which an assignee can usually take straight from the handover inventory.

When a package proceeds, the SourceX Evidence Packet records provenance, licensing rights, permitted use, the privacy record and release authorization, giving the assignee a document it can share with creditors. Large archives stay in the assignee's storage or move on encrypted drives; SourceX does not host multi-terabyte datasets.