Selling company data in bankruptcy
When a US company files for bankruptcy, its records become property of the estate, the same as its trucks or its accounts receivable. They can be sold or licensed to AI companies to recover value for the creditors. Who makes that decision depends on the chapter, a sale outside the normal course of business needs the court’s approval, and the privacy policy the company had when it filed can limit what may be transferred.
Who decides, by chapter
The estate is defined broadly in 11 U.S.C. 541: every legal or equitable interest the company held when the case began. The trustee’s duties are in 11 U.S.C. 704, and a debtor in possession takes on most of them under 11 U.S.C. 1107.
| Case | Who decides about the records |
|---|---|
| Chapter 7 liquidation | The trustee. The Bankruptcy Code tells a Chapter 7 trustee to collect and turn into money the property of the estate, and the records are part of it. |
| Chapter 11 reorganization | The company itself, as debtor in possession, often through a chief restructuring officer. A creditors’ committee usually watches and can object. |
| Subchapter V (small business) | The company stays in control, with a Subchapter V trustee who oversees the case. |
| A lender with a lien on all assets | Not the decision maker, but its lien can reach the records, so its consent or a share of the proceeds is part of the deal. |
Court approval and the section 363 sale
Licensing a closed company’s records is not part of its ordinary business, so it goes through 11 U.S.C. 363(b): the trustee or debtor files a motion, creditors get notice, and the court holds a hearing before it approves. The motion, the bids and the order sit on the public docket.
That shapes the deal. Buyers know other bidders can appear, a stalking horse bid can set the floor, and the timing follows the court calendar. In the 2026 sale of a closed US airline’s emails and chat, unions and members of Congress objected, and the court delayed a hearing.
The privacy policy question
Section 363(b)(1) adds a rule for personal information. If the company’s privacy policy, in force on the day it filed, said it would not transfer personally identifiable information, the court can approve the sale only if it fits that policy, or after a consumer privacy ombudsman is appointed under 11 U.S.C. 332 and the court finds the sale breaks no other law.
So the first document to find is the privacy policy, every version of it, with dates. Removing names, emails, phone numbers and account numbers before anything is transferred narrows the question a great deal, because what leaves the estate is no longer personal information about identifiable people.
Before anything is cancelled
- Keep the email, chat, ticketing, CRM, code and file accounts paid until a full export exists. A cancelled account is often deleted after a short grace period.
- List every system, what it holds, the years it covers and who still has an admin login.
- Save the privacy policy and the customer terms in each version.
- Write down the headcount at the company’s peak, counting people who worked at a computer. That number, not today’s, is what buyers ask first.
- Send nothing to a buyer yet. A one-page description is enough to learn whether anyone is interested.
Read next
- Closing or bankrupt companies. Who signs in each kind of closing.
- What company data is worth. Ranges by data type and company size.
- De-identification. How names and personal details come out first.
Questions about selling company data in bankruptcy
Who receives the money from a data sale in bankruptcy?
The estate. It is then paid out to creditors in the order the Bankruptcy Code sets, after the costs of the case.
Do we need a court hearing to license the records?
Usually yes, because it is a sale or license outside the ordinary course of business. The estate’s counsel files the motion and handles the hearing.
Can records with customer names in them be sold?
Only within the privacy policy, or after a consumer privacy ombudsman has reported and the court has approved. Taking the names out first is the simpler path.
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