Selling company data in an assignment for the benefit of creditors (ABC)

How an ABC works

An ABC is governed by state law and has long been used as an alternative to Chapter 7 liquidation because it is faster, more flexible and usually cheaper, Mayer Brown explains. The specifics vary by state, but the process generally has four steps.

• The board, and shareholders where required, authorise the shutdown and the assignment of all assets to an assignee. From then on the board has no further role.
• The assignee notifies creditors and sets a deadline for claims.
• The assignee sells the assets to get the most value, sometimes as a going concern to a buyer lined up in advance, sometimes in bulk or by auction.
• The assignee pays creditors from the proceeds in the order the law sets.

Source: Mayer Brown: ABC, assignments for the benefit of creditors (Feb 2023)

Company records are part of what the assignee sells

AI developers buy the working records of closed companies: Slack and email archives, code, tickets and documents. Shut-down startups have sold workspace archives to AI companies, Fast Company reported, and buyers building simulated workplaces look for varied, deep records, according to MIT Technology Review. The deals tracker lists the sales with public prices, including a $10 million winning bid for a bankrupt airline's emails and chats.

In an ABC these records belong to the assignee along with the code, domain names and other intellectual property. They can be sold with those assets or on their own. Telling the assignee early that the records have a market makes it more likely they are preserved and sold rather than deleted with the servers.

Source: Fast Company: shuttered startups are selling old Slack chats and emails to AI companies (Apr 2026)

Export and preserve before anything is cancelled

The most common way this value is lost is by accident: a shutdown checklist cancels the subscriptions that hold the records.

• Run admin exports of Slack or Teams, Google Workspace or Microsoft 365, the ticketing system, the project tracker and code repositories before any subscription lapses.
• Keep admin credentials and hand them to the assignee, rather than closing accounts.
• Record what exists: systems, years covered, approximate volume and who owned each. The data inventory template gives the columns.
• Check for legal holds. Records tied to a dispute must be preserved as they are and may not be sellable.
• Do not delete servers or cloud storage until the assignee has decided what to sell.

Privacy promises limit what can be sold

When RadioShack's customer data was put up for sale in its 2015 bankruptcy, the FTC pointed to the company's promises not to sell customer information. It recommended that the data not be sold as a standalone asset, that it go only to a buyer in substantially the same line of business, that the buyer be bound by the original privacy policy, and that customers give affirmative consent before any materially different use.

Selling customer records to train AI is a materially different use from the one most privacy policies described, so customer personal information is usually de-identified or left out. Employee messages in chat and email raise similar questions; see selling Slack and email archives.

Source: FTC: request to protect RadioShack customers' personal information in its bankruptcy sale (May 2015)

Who can authorise a data sale at each stage

Source: 11 U.S. Code section 363 (sale of property in bankruptcy)

ABC or bankruptcy for a data sale

An ABC usually has little or no court involvement: in California, Texas and Illinois it proceeds with little or none, while Delaware and New York involve courts to varying degrees. A bankruptcy sale needs court approval, and under section 363 of the Bankruptcy Code a sale of personal information that conflicts with the company's privacy policy needs a consumer privacy ombudsman's review. Courts can appoint one even when the policy allows the sale, as in the Celsius case the Harvard Law Review discusses.

Buyers often prefer buying from an assignee because an independent fiduciary's sale is harder for creditors to unwind than a direct purchase from a distressed company. But an assignee generally cannot sell assets free and clear of liens, and contracts that bar assignment still bind. Which route is right is a question for insolvency counsel.

Source: Mayer Brown: ABC, assignments for the benefit of creditors (Feb 2023)

Legal questions by situation

The rules that decide what can be licensed, by situation and country:

• Is it legal to sell company data for AI training?
• De-identifying records before licensing
• GDPR, CCPA and licensing company data
• Selling your business or practice
• Tax practices and IRC Section 7216
• Law firms and ABA Rule 1.6
• UK companies and UK GDPR
• Australian businesses and the Privacy Act

Next step

If you are planning a wind-down, list the records before the shutdown checklist starts and tell your assignee or counsel they have a market. Origin can describe them for buyers at company level, without an export. See how we help companies winding down and wind-down services that sell startup data, compared.

Origin Data Partners is independent and is not affiliated with any AI data buyer. We help owners compare buyers and find the best fit for their records. See what your data is worth.