# 363 Sale of Debtor Data: Guide for Trustees and ABCs

> How a 363 sale works for a debtor's data and operating records: what trustees and assignees can sell to AI buyers, the privacy ombudsman and the Spirit case.

Canonical: https://origindatapartners.com/guides/sell-debtor-data-363-sale
By: Origin Data Partners
Status: Published
Published: 2026-11-13
Updated: 2026-11-14
Sources checked: 2026-11-13

## Quick answer

A 363 sale is a sale of a debtor's property outside the ordinary course of business under section 363(b) of the Bankruptcy Code, after notice and a hearing. A debtor's operating records, such as work orders, maintenance logs, engineering files, claims and loan files, are estate property that a trustee or debtor in possession can sell under section 363(b) after notice and a hearing. The main limit is consumer personal information: if the debtor promised customers it would not transfer it, a sale needs either consistency with that promise or a consumer privacy ombudsman and court approval. Spirit Airlines is the leading example and is still contested: Google was selected at $10 million for de-identified data, the debtors' revised terms add employee-data exclusions and buyer-paid de-identification, and the sale hearing is set for 17 November 2026.

## Key points

- Operating records are estate property; section 363(b) lets the trustee sell them after notice and a hearing.
- Consumer personal information is the restricted part: a privacy policy promise triggers the ombudsman process.
- Employee data and third parties' confidential data draw objections even when no consumer data is sold.
- Prepare the asset like any other: inventory, ownership, de-identification, a sample and a datasheet.

## Why a debtor's operating records are now an estate asset

Because AI developers pay for them. In the Spirit Airlines Chapter 11 case, the debtors "conducted a virtual Auction with respect to the Deidentified Data on Friday, August 14, 2026" ([Dkt. 1779](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1779.0.pdf)). The notice of results names Google LLC "as the highest and best bid", with "Total Consideration (USD): $10,000,000" ([Dkt. 1463](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1463.0.pdf)).

As of 13 November 2026 the sale is not approved. The hearing "has been adjourned and will now take place at 11:00 a.m. on November 17, 2026" ([Dkt. 1779](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1779.0.pdf)), and on 9 November the debtors filed a "Revised Proposed Sale Order, (B) Revised Sale Agreement and (C) Ancillary Agreements in Connection with the Proposed Sale of the Deidentified Data" ([CourtListener docket](https://www.courtlistener.com/docket/71233134/spirit-aviation-holdings-inc/?order_by=desc)). According to Bankruptcy Observer's docket summary (updated 12 November 2026), the revised terms have Google "pay the deidentification costs on top of the $10 million price" and add limits on employee data, and objections from the Allied Pilots Association, the Southwest Airlines Pilots Association, Airlines for America and others remain ([Bankruptcy Observer](https://www.bankruptcyobserver.com/news/spirit-airlines-bankruptcy-data-sale-google-competing-bid)). The sale is contested and was not approved when this page was checked; check the docket for the outcome.

For a Chapter 7 trustee, the duty is direct: to "collect and reduce to money the property of the estate for which such trustee serves" ([11 U.S.C. 704](https://www.law.cornell.edu/uscode/text/11/704)). Records that were once treated as having no resale value may now be worth a sale process.

This page is general information, not legal advice: it quotes each rule with its source, and your own counsel decides how it applies to you.


## What sells, and what does not

Buyers want records that show how work was done and how it turned out. The legal risk sits mostly in personal information and in data that belongs to someone else.

| Record type | Examples | Sale outlook |
| --- | --- | --- |
| Operating records | Work orders, maintenance logs, engineering change history, quality records, closeout sets, tickets | The core asset; sold de-identified, often with a sample first |
| Decision-with-outcome files | Claim files with payouts, loan files with performance, underwriting files | Valuable; regulated personal data removed or de-identified |
| Employee data | Payroll, timecards, crew schedules, internal messages | Expect objections; exclude or de-identify heavily |
| Consumer personal information | Customer names, home addresses, emails, phone numbers, card numbers | Restricted by section 363(b)(1) where a privacy policy promised no transfer |
| Third parties' confidential data | OEM technical data, vendor and customer data under NDAs | Counterparties may object and enforce their agreements |
| Regulated reports | Suspicious activity reports and anything revealing one | Never sold |

On the last row: federal law bars revealing "any information that would reveal that the transaction has been reported" ([31 U.S.C. 5318(g)(2)](https://www.law.cornell.edu/uscode/text/31/5318)).


## How a 363 sale works: section 363(b)(1) and the privacy ombudsman

The sale power: "The trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate" ([11 U.S.C. 363](https://www.law.cornell.edu/uscode/text/11/363)). The limit applies where the debtor "discloses to an individual a policy prohibiting the transfer of personally identifiable information about individuals to persons that are not affiliated with the debtor" and the policy was in effect when the case began. Then "the trustee may not sell or lease personally identifiable information to any person unless" the sale "is consistent with such policy", or "after appointment of a consumer privacy ombudsman in accordance with section 332, and after notice and a hearing, the court approves such sale", including "finding that no showing was made that such sale or such lease would violate applicable nonbankruptcy law".

The definition matters. Personally identifiable information under the Code covers listed items "if provided by an individual to the debtor in connection with obtaining a product or a service from the debtor primarily for personal, family, or household purposes" ([11 U.S.C. 101(41A)](https://www.law.cornell.edu/uscode/text/11/101)). A sale of business records with no consumer information in scope may not trigger the ombudsman process at all; employee data and business contacts are outside that definition but, as Spirit shows, still draw objections. In the Spirit case an ombudsman was appointed for the de-identified data sale and reported to the court; her supplement recommends "that from a privacy perspective, approval of the sale of the deidentified data would be appropriate" and says she reached no conclusion on risks to employees ([Dkt. 1684](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1684.0.pdf)). Expect the question even when no customer list is in scope.

When it applies, the court orders the U.S. trustee to appoint "1 disinterested person (other than the United States trustee) to serve as the consumer privacy ombudsman", "not later than 7 days before the commencement of the hearing". The ombudsman may present the debtor's privacy policy and "the potential alternatives that would mitigate potential privacy losses or potential costs to consumers" ([11 U.S.C. 332](https://www.law.cornell.edu/uscode/text/11/332)). De-identification and use restrictions are the usual alternatives.

Two other parts of section 363 shape the deal. A sale is free and clear of other parties' interests "only if" one of the conditions in 363(f) is met, and a later reversal on appeal "does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith" ([11 U.S.C. 363](https://www.law.cornell.edu/uscode/text/11/363)). Buyers will ask for a good-faith finding in the order. "After notice and a hearing" does not always mean a courtroom: the Code "authorizes an act without an actual hearing if such notice is given properly and if" no party in interest asks for one in time ([11 U.S.C. 102(1)](https://www.law.cornell.edu/uscode/text/11/102)).


## A 363 sale, a plan sale or a secured lender's sale

The table compares three routes for selling a distressed company's records; the route decides who signs and what the buyer gets. In a section 363 sale the trustee or debtor in possession sells after notice and a hearing, without waiting for a plan, and can sell free and clear of other parties' interests when a condition in 363(f) is met. A Chapter 11 plan may itself provide for the "sale of all or any part of the property of the estate" ([11 U.S.C. 1123](https://www.law.cornell.edu/uscode/text/11/1123)), and that sale goes ahead only under a confirmed plan. Outside bankruptcy, a secured lender can "sell, lease, license, or otherwise dispose of" collateral after default, so long as "every aspect" of the disposition is commercially reasonable ([UCC 9-610](https://www.law.cornell.edu/ucc/9/9-610)).

| Route | Who decides | What the buyer gets | Timing |
| --- | --- | --- | --- |
| Section 363 sale | Trustee or debtor in possession, after notice and a hearing | Free and clear of interests if a 363(f) condition is met; a good-faith buyer keeps the sale if the authorization is reversed on appeal, unless the sale was stayed pending appeal | No plan needed |
| Sale under a confirmed plan | The court, when it confirms the plan | What the plan and confirmation order provide | After a plan is confirmed |
| Article 9 sale by a secured lender | The secured party, outside court | A transfer subject to commercial reasonableness; the lender may license collateral as well as sell it | After default, without a court order |


## Chapter 7, Chapter 11 and the ABC route

In Chapter 7, the trustee runs the sale and files the 363 motion. In Chapter 11, the debtor in possession usually does, under court-approved bidding procedures, as Spirit did. A records sale can be its own lot or part of a larger asset sale; selling it separately lets buyers who only want the data bid.

An assignment for the benefit of creditors is a state-law alternative: the assignee sells the assets and pays creditors. How much a court is involved depends on the state; some run assignments without a court, others have the court supervise the assignee. There is no 363 order and no ombudsman, so the privacy promises the company made, and any agreements with customers and vendors, have to be handled by contract and de-identification. See [selling company data in an ABC](https://origindatapartners.com/guides/company-data-assignment-for-benefit-of-creditors) and [business bankruptcy and your data](https://origindatapartners.com/guides/business-bankruptcy-company-data).


## Specialty records that sell, by sector

These kinds of debtor hold records AI developers ask for most. Each sector guide covers the records, who can sign and the limits.

| Debtor | Records | Watch for | Sector guide |
| --- | --- | --- | --- |
| Airline, MRO, repair station, charter operator | Maintenance work orders, logbooks, parts and reliability records | OEM confidentiality (as in Spirit), export control, crew data | [Aviation repair station data](https://origindatapartners.com/guides/aviation-repair-station-data) |
| Manufacturer of engineered products | CAD with revisions, engineering changes, quality records | Customer-owned designs, ITAR and EAR | [Manufacturer data](https://origindatapartners.com/guides/engineered-product-manufacturer-data) |
| Contractor | Closeout sets: RFIs, submittals, change orders, estimate vs final cost | Owner and architect rights in drawings, subcontractor pricing | [Construction company data](https://origindatapartners.com/guides/construction-contractor-data) |
| Insurer, MGA, TPA | Claim files from first notice to payout | Who owns the files; medical and financial privacy | [Claims data holders](https://origindatapartners.com/guides/insurance-claims-file-holders) |
| Non-bank lender | Loan files with payment performance | Consumer financial privacy, SAR confidentiality, bureau data | [Loan file data](https://origindatapartners.com/guides/non-bank-lender-loan-file-data) |
| Physician group, specialty practice, billing company | Claims, remittances, denials, appeals and prior authorizations | HIPAA: a sale of patient information needs authorization unless an exception applies; a billing company acts for its clients | [Healthcare claims data](https://origindatapartners.com/guides/healthcare-billing-denial-prior-auth-data) |
| Chip or electronics design firm | Its own RTL, testbenches, regressions and bug history | Customer-owned designs, foundry and IP vendor agreements, export control | [Chip design firm data](https://origindatapartners.com/guides/chip-design-firm-data) |
| Biotech, CRO, contract lab | Lab notebooks, LIMS records and assay results, failed runs included | Sponsor-owned study data, GLP archive duties, human-subject consent | [Biotech and lab data](https://origindatapartners.com/guides/biotech-cro-lab-data) |

For a lender, the Gramm-Leach-Bliley Act's notice and opt-out rules have an exception for disclosures "in connection with a proposed or actual sale, merger, transfer, or exchange of all or a portion of a business or operating unit" concerning solely that business's consumers ([15 U.S.C. 6802](https://www.law.cornell.edu/uscode/text/15/6802)). Whether a stand-alone data sale fits that exception is a question for counsel; most buyers take de-identified files anyway.


## Preparing the records for sale

- Preserve first: keep systems and cloud accounts paid until the records are exported or sold. Deleted data cannot be sold.
- Inventory the records: systems, years, volumes, and what links them (work order to part, claim to payout, loan to performance).
- Check ownership: customer contracts, vendor licences and confidentiality agreements that cover data in the systems.
- Find the personal information and decide what is excluded or de-identified. See [de-identifying company data](https://origindatapartners.com/guides/de-identify-company-data-before-licensing).
- Prepare a sample and a one-page datasheet so bidders can price without full access.
- Write the use restrictions you expect the court or objectors to ask for into the draft sale agreement.


## Running the sale: bidding procedures and objections

Spirit, a contested case, shows the usual sequence: a bidding procedures order covering transfers "free and clear of all liens, claims, encumbrances, and other interests", an auction, a notice of results with a successful and an alternate bid, then a sale hearing ([Dkt. 1779](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1779.0.pdf); [Dkt. 1463](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1463.0.pdf)).

Expect objections from parties whose data is in the systems. International Aero Engines filed a limited objection and a "cross-motion for enforcement of the confidentiality provisions in their agreements with the Debtors", saying it had provided "certain proprietary commercial information, technical data and information, and financial data and information" ([Dkt. 1538](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1538.0.pdf)). Unions objected over employee data, Airlines for America filed a "Joinder to Union Objections to Debtors' Proposed Sale of Deidentified Data", and the SkyWest InFlight Association asked to be heard "Concerning Employee-Data Privacy in Proposed Sale of Deidentified Data" ([CourtListener docket](https://www.courtlistener.com/docket/71233134/spirit-aviation-holdings-inc/?order_by=desc)). The Allied Pilots Association and the Southwest Airlines Pilots Association joined the pilots' and flight attendants' objections, and the debtors say the revised terms resolve the flight attendants' and Air Line Pilots Association objections ([Bankruptcy Observer](https://www.bankruptcyobserver.com/news/spirit-airlines-bankruptcy-data-sale-google-competing-bid)). The debtors said they were working to address "the treatment of personally identifiable or sensitive employee information" ([Dkt. 1779](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1779.0.pdf)).

Building exclusions, de-identification and use restrictions into the first draft shortens that list.


## For sell-side M&A advisers: licensing records before or alongside a sale

Outside insolvency, a company being sold can license copies of its records before closing, or carve them out as a separate asset. A non-exclusive license leaves the records with the business for the acquirer while bringing in cash; an exclusive one may need the acquirer's consent. The acquirer will want to see any license in diligence. See [asset sales and company data](https://origindatapartners.com/guides/asset-sale-company-data).


## Next step for trustees, assignees and advisers

Origin Data Partners is an independent data partner that helps companies, and the estates of closed companies, get their records bought: it reviews what the records are, who can sign, and which buyers want them, at no cost to the estate. A buyer may pay Origin when a deal closes. Any payment Origin receives from a buyer is disclosed to the estate, so the estate can disclose it to the court ([how Origin is paid](https://origindatapartners.com/referral-disclosure)).

Origin pays no fee, commission or other payment to a bankruptcy trustee, debtor in possession, assignee for the benefit of creditors, receiver, examiner or any professional employed by an estate, for an estate they serve. Their duties run to the estate and its creditors, and the court decides how they are paid.

Serving an estate that holds years of operating records? [Get a free buyer check and a records description you can use in the sale motion](https://origindatapartners.com/check-fit#company-review).


## Questions and answers

### Can a bankruptcy trustee sell a debtor's business records to AI companies?

Yes, in general. Business records are estate property, and section 363(b)(1) lets the trustee sell estate property outside the ordinary course after notice and a hearing. Consumer personal information covered by a privacy promise needs extra steps, and third parties' confidential data can draw objections.

### Is customer data treated differently from operating records in a 363 sale?

Yes. If the debtor told customers it would not transfer their personal information, the trustee can sell it only consistently with that policy, or after a consumer privacy ombudsman is appointed and the court approves. Operating records without consumer information are not subject to that limit.

### When is a consumer privacy ombudsman appointed in a bankruptcy sale?

When the sale includes personally identifiable information covered by a privacy policy that prohibited transfer and the sale is not consistent with that policy. The court then orders the U.S. trustee to appoint a disinterested ombudsman at least 7 days before the sale hearing.

### Does a records sale need court approval in a Chapter 7 case?

A sale outside the ordinary course of business needs notice and a hearing under section 363(b). The Code allows the sale without an actual hearing if notice is given properly and no party in interest asks for one in time. Buyers usually want an order with a good-faith finding.

### Can an ABC assignee sell company data without going to court?

Often, but it depends on the state: some states supervise assignments in court. Either way there is no 363 order. The company's privacy promises and its contracts with customers and vendors still apply, so personal data is normally excluded or de-identified.

### What did the Spirit Airlines data sale include, and was it approved?

Spirit auctioned de-identified business data on 14 August 2026; Google LLC was the successful bidder at $10 million, and revised terms filed on 9 November add employee-data exclusions and have Google pay the de-identification costs. Pilots' unions, Airlines for America and International Aero Engines objected, and the privacy ombudsman recommended approval from a privacy perspective. As of 13 November 2026 the sale was contested, not approved, and set for a hearing on 17 November 2026.

### Does Origin pay trustees, assignees or estate professionals who bring it a debtor's records?

No. Origin pays no fee to a trustee, debtor in possession, assignee, receiver, examiner or estate professional for an estate they serve. The estate pays Origin nothing; a buyer may pay Origin when a deal closes, and that payment is disclosed so the estate can tell the court.

### What is a stalking horse bid in a 363 sale?

A stalking horse is an initial bid the debtor or trustee agrees before the auction. It sets the floor that other bidders must beat, and the court may approve protections for that bidder, such as a break-up fee or expense reimbursement, in its bidding procedures order.

### How is company data sold in a Section 363 bankruptcy sale?

The trustee or debtor in possession asks the court to approve the sale under section 363 of the Bankruptcy Code, usually after a bidding process and a sale hearing. If the debtor's privacy policy limits transfers of personal information, the court appoints a consumer privacy ombudsman before approving a sale that includes it. Buyers usually take a de-identified copy with personal and sensitive records excluded. The Spirit Airlines records sale is an example: contested and not approved before its 17 November 2026 hearing.

### Can a secured lender credit bid for a debtor's records at a 363 sale?

Yes, if its lien covers the records being sold, unless the court orders otherwise for cause. Under section 363(k) the holder of a lien securing an allowed claim may bid at the sale and, if it buys, offset the claim against the price. The legislative notes on Cornell's page say the creditor may bid the full allowed claim, including any unsecured portion when it is undersecured ([11 U.S.C. 363](https://www.law.cornell.edu/uscode/text/11/363)).

## Sources

- [11 U.S.C. 363: use, sale, or lease of property](https://www.law.cornell.edu/uscode/text/11/363)
- [11 U.S.C. 332: consumer privacy ombudsman](https://www.law.cornell.edu/uscode/text/11/332)
- [11 U.S.C. 704: duties of trustee (Chapter 7)](https://www.law.cornell.edu/uscode/text/11/704)
- [11 U.S.C. 101(41A): definition of personally identifiable information](https://www.law.cornell.edu/uscode/text/11/101)
- [11 U.S.C. 102(1): meaning of "after notice and a hearing"](https://www.law.cornell.edu/uscode/text/11/102)
- [In re Spirit Aviation Holdings, No. 25-11897 (Bankr. S.D.N.Y.), Dkt. 1463: Notice of Auction Results for the Deidentified Data (August 14, 2026)](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1463.0.pdf)
- [Spirit Aviation Holdings, Dkt. 1538: limited objection of International Aero Engines and cross-motion to enforce confidentiality agreements (August 27, 2026)](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1538.0.pdf)
- [Spirit Aviation Holdings, Dkt. 1684: Supplement to the report of the consumer privacy ombudsman (October 5, 2026)](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1684.0.pdf)
- [Spirit Aviation Holdings, Dkt. 1779: Notice of Adjournment of Hearing on the Sale of the Deidentified Data (November 4, 2026)](https://storage.courtlistener.com/recap/gov.uscourts.nysb.331039/gov.uscourts.nysb.331039.1779.0.pdf)
- [CourtListener: Spirit Aviation Holdings, Inc., 25-11897, docket (read November 13, 2026)](https://www.courtlistener.com/docket/71233134/spirit-aviation-holdings-inc/?order_by=desc)
- [Bankruptcy Observer: Spirit Airlines data sale docket summary (updated November 12, 2026)](https://www.bankruptcyobserver.com/news/spirit-airlines-bankruptcy-data-sale-google-competing-bid)
- [15 U.S.C. 6802: obligations with respect to disclosures of personal information (Gramm-Leach-Bliley Act)](https://www.law.cornell.edu/uscode/text/15/6802)
- [31 U.S.C. 5318(g)(2): suspicious activity reports, notification prohibited](https://www.law.cornell.edu/uscode/text/31/5318)
- [11 U.S.C. 1123: contents of a Chapter 11 plan](https://www.law.cornell.edu/uscode/text/11/1123)
- [UCC 9-610: disposition of collateral after default](https://www.law.cornell.edu/ucc/9/9-610)

## Related reading

- [Business bankruptcy: Chapter 7, Chapter 11 and your data](https://origindatapartners.com/guides/business-bankruptcy-company-data)
- [Selling company data in an assignment for the benefit of creditors (ABC)](https://origindatapartners.com/guides/company-data-assignment-for-benefit-of-creditors)
- [/glossary/section-363-sale](https://origindatapartners.com/glossary/section-363-sale)
- [/glossary/assignment-for-the-benefit-of-creditors](https://origindatapartners.com/glossary/assignment-for-the-benefit-of-creditors)
- [/who-we-help/companies-winding-down](https://origindatapartners.com/who-we-help/companies-winding-down)
- [AI data licensing: a guide for lawyers, accountants and advisors](https://origindatapartners.com/guides/ai-data-licensing-for-advisors)
- [Asset sale vs stock sale: tax, liabilities and your data](https://origindatapartners.com/guides/asset-sale-company-data)
- [Can you sell aircraft maintenance records to AI companies?](https://origindatapartners.com/guides/sell-aircraft-maintenance-records-ai)
- [Estate Records: What Origin Does for Trustees and Assignees](https://origindatapartners.com/guides/estate-records-for-trustees-and-assignees)