Data Assets in Insolvency: How Administrators, Trustees and Liquidators Sell Data to AI Buyers

When a company becomes insolvent, its data becomes an estate asset that a trustee, administrator or liquidator may sell or license to AI buyers, but only with the court or creditor approval the insolvency law requires. Spirit Airlines shows the gap between a bid and a sale: at the auction of its de-identified business data on 2026-08-14, Google LLC made the successful bid of USD 10,000,000 and Mercor.io Corporation the alternate bid of USD 7,500,000, yet the sale is not approved as of 2026-11-09 and the sale hearing is set for 2026-11-17.

Estate sales are one route in AI training data licensing, covered here from the officeholder's side, including the option not to sell. DataPacts is not a broker and takes no cut of any sale.

How an Estate Sells Data to AI Buyers: Officeholders, Court Approval and Bids

In an insolvency, the officeholder, not the board, decides whether the company's data is sold, and a court or the creditors usually must approve the sale before any buyer receives data. Five officeholders hold that power of sale in the jurisdictions covered here.

• US trustee or debtor in possession, after notice and a hearing (11 U.S.C. 363(b)(1)).
• UK administrator or liquidator, by public auction or private contract (Insolvency Act 1986 Sch B1 para 60; Sch 4 para 6).
• German Insolvenzverwalter, from the opening of proceedings (s.80(1) InsO).
• French liquidateur, under the juge-commissaire (Code de commerce art. L642-19).
• Delaware assignee, out of court (10 Del. C. ch. 73A, in force since 2026-06-10).

A court-supervised data sale runs through bidding procedures, an auction, a privacy review, a sale hearing and a sale order, and only the order lets data move. In the Spirit Airlines chapter 11, the bidding procedures order was entered on 2026-06-22 (ECF No. 1213), the auction took place on 2026-08-14, and the consumer privacy ombudsman reported on 2026-09-08 and 2026-10-05. The sale hearing is set for 2026-11-17, with no sale order as of 2026-11-09. A successful bid is an auction result, not a sale.

Insolvency Pages at a Glance

This section has 13 pages, one per jurisdiction, procedure or recurring question an officeholder faces; the table lists each with the record behind it, as of 2026-11-09.

The Legal Gate Before a Data Sale, by Jurisdiction

Every jurisdiction covered here lets the officeholder sell estate property, data included, and each attaches a different approval: a court hearing in the US, creditor consent in Germany and Austria, a judge's authorization in France. The table compares eight jurisdictions as of 2026-11-09, with the official text as source.

Italy's sale rules and Canada's insolvency statutes are not summarized on this page. The privacy, copyright and employee rules that bind the data after a sale continue under AI training data law by jurisdiction.

United States: Notice, Hearing and Privacy Review in Chapter 11 and Chapter 7 Cases

Outside the ordinary course, a trustee or debtor in possession sells estate property, data included, only after notice and a hearing under 11 U.S.C. 363(b)(1), and section 363(f) lets the sale pass free and clear of interests if one of five conditions is met. Personally identifiable information covered by a privacy policy in effect at the filing may be sold only consistently with that policy or after a consumer privacy ombudsman is appointed (11 U.S.C. 332, at least 7 days before the hearing; Fed. R. Bankr. P. 6004(g)), with notice, a hearing and court approval. The definition in 11 U.S.C. 101(41A) covers only data individuals provide to obtain products or services primarily for personal, family or household purposes, so employee and business data fall outside it on its face.

Delaware: Out-of-Court Assignees Under Chapter 73A

Delaware's Uniform Assignment for the Benefit of Creditors Act, 10 Del. C. ch. 73A, replaced the repealed sections 7381 to 7387 effective 2026-06-10 and lets an independent assignee sell or license data assets out of court. The assignee petitions the Court of Chancery within 14 days (s.7321A(a)), and the Act has no consumer privacy ombudsman mechanism.

United Kingdom: Office-Holder Powers Under the Insolvency Act 1986

An administrator may sell company property by public auction or private contract (Insolvency Act 1986 Sch B1 para 60 and Sch 1 para 2), and a liquidator holds the same power under Sch 4 para 6. Schedule B1 has applied since 2003-09-15, when the Enterprise Act 2002 inserted it. Under para 69 the administrator acts as the company's agent, so the company itself stays the data controller.

Germany and Austria: Creditors' Committee Consent and Court Approval

On the opening of German proceedings the power to dispose of the estate, data included, passes to the Insolvenzverwalter (s.80(1) InsO), who realizes it after the report meeting (s.159) with creditors' consent for significant acts such as selling the business (s.160). The German data protection authorities' conference (DSK) resolved on 2024-09-11 that handing customer, supplier and employee data to a bidder before signing is in principle not permitted without consent, and that special-category customer data needs explicit consent (GDPR Art. 9(2)(a)). In Austria, selling the business or all movable assets needs the approval of the creditors' committee and the insolvency court regardless of value (IO s.117(1)).

France: Court-Set Prices and Conditions in Liquidation Judiciaire

In a liquidation judiciaire, the juge-commissaire orders a public auction or authorizes a private sale at prices and conditions the judge sets (Code de commerce art. L642-19, in the version in force from 2009-02-15 to 2016-11-20). The judge may also require the draft private sale to be submitted first.

Canada: Privacy Consent When Personal Information Is the Asset

PIPEDA (S.C. 2000, c. 5) treats the licensing of an organization's assets as a business transaction (s.2(1)) but withdraws the business-transaction exception where the primary purpose or result is the sale or lease of personal information (s.7.2(4)). Bill C-36, which would amend PIPEDA, is at second reading as of 2026-11-09.

Three Worked Estates: Spirit Airlines, 23andMe and Character.AI

Three insolvency cases show the range: an archive sale awaiting approval, a genetic database sold with court approval, and a sale that leaves training data out. The table compares them alphabetically as of 2026-11-09, with the filing that states each value.

Spirit Airlines: A Successful Bid That Is Not Yet an Approved Sale

Spirit Airlines' chapter 11 estate auctioned a de-identified archive of its internal business data on 2026-08-14, with Google LLC as successful bidder at USD 10,000,000 and Mercor.io Corporation as alternate bidder at USD 7,500,000, but no court has approved the sale as of 2026-11-09. The case is In re Spirit Aviation Holdings, Inc., et al., No. 25-11897 (SHL) (Bankr. S.D.N.Y.), filed on 2025-08-29; the bids come from the Notice of Auction Results (Dkt. 1463). The full record is kept under Spirit Airlines' data archive sale.

Under the Bill of Sale, an independent Deidentification Agent (Tonic.ai, per the ombudsman's report) de-identifies the data to the CCPA standard in Cal. Civ. Code 1798.140(m), plus 45 CFR 164.514 for health data. The buyer bears that cost, personal data is excluded from the assets, and the seller's representations do not survive consummation. The asset schedule lists 100,000,000 emails, 500,000,000 Teams items and 175,658 employee records as included and 97,500,000 passenger profiles as not included.

The consumer privacy ombudsman's supplemental report of 2026-10-05 (Dkt. 1684) finds that "from a privacy perspective, approval of the sale of the deidentified data would be appropriate", but its footnote 3 states that risks to employees and third parties were not investigated; the court has not ruled on the bid as of 2026-11-09. micro1 Inc. filed a notice of intent to submit a competing bid on 2026-09-03 (ECF No. 1556) with no amount, proposing to de-identify the data itself. Objectors to the sale include AFA-CWA, ALPA, the Allied Pilots Association, IAM, TWU Local 570 and PAFCA.

The 2026-11-06 hearing was cancelled (Dkt. 1786), and the sale hearing is adjourned to 2026-11-17 (Dkt. 1779), so the successful bid remains unapproved as of 2026-11-09. The ombudsman also asked for further inquiry into Mercor's security incident and whether Mercor is an appropriate, qualified buyer, a question the Mercor data buyer profile follows.

23andMe: A Genetic Database Sold to a Nonprofit Buyer

23andMe's chapter 11 estate sold substantially all its assets, including its genetic database, to TTAM Research Institute, a California nonprofit public benefit corporation, for USD 305.0 million in cash under a sale order of 2025-06-27 that closed on 2025-07-14. The case is No. 25-40976 in the Bankruptcy Court for the Eastern District of Missouri, filed on 2025-03-23, and Regeneron's initial winning bid at the auction of 2025-05-17 was superseded.

The genetic database earned license income before the bankruptcy: GSK made a USD 50 million one-time payment for an extension of the exclusive collaboration period (8-K exhibit of 2022-01-18) and a USD 20 million upfront payment for a one-year non-exclusive data license (2023-10-30). The TTAM purchase is a bankruptcy asset sale, not an AI training license. The UK Information Commissioner's Office co-signed a joint letter on the bankruptcy, and the SEC registrant (CIK 0001804591) is now Chrome Holding Co.

Character.AI: A Stalking-Horse Bid That Excludes Training Data

Character Technologies, Inc., the company behind Character.AI, filed chapter 11 on 2026-10-12, and its proposed stalking-horse buyer, Disney Worldwide Services, Inc., bids for assets that exclude end-user data, training data and finished models. The debtor's bidding procedures motion (Bankr. D. Del. 26-11603 (BLS), Doc 15, filed 2026-10-13) sets the bid at USD 20,000,000 in cash and caps the break-up fee and expense reimbursement at USD 700,000 (3.5 %); the sale process is pending as of 2026-11-09.

The exclusions in Doc 15-2 also cover end-user personal information, user inputs and outputs, and unprocessed data. The motion proposes a bid deadline of 2026-11-20, an auction on 2026-11-23 and a sale hearing on 2026-11-24. The court record on user chats and training data is followed under the Character.AI chapter 11.

How an Officeholder Prepares Estate Data for Sale: Securing, Scoping, De-identifying and Bidding

An officeholder prepares data for sale by securing it before vendors delete it, carving out what may not be sold, and running a bid process the court or creditors can approve. The six steps below run in the order their deadlines fall.

1. Secure exports before subscriptions lapse: Google Workspace deletes its export bucket 60 days from the start (checked 2026-11-09), and Microsoft 365 for business deletes data no later than 180 days after cancellation (page dated 2026-06-08).
2. Place retention holds, since record duties survive a sale: 10 years for books under HGB s.257, 3 years for payroll records under 29 CFR 516.5, and 3 years for UK private-company accounting records under Companies Act 2006 s.388(4), where HMRC expects 6.
3. Carve out personal data and excluded systems, as the Spirit estate did with its passenger databases.
4. Appoint an independent de-identification provider instead of letting a bidder de-identify the data.
5. Run bidding procedures with a diligence window and a check of each bidder's security record.
6. Obtain the approval the jurisdiction requires: a sale order, creditor consent, or the juge-commissaire's authorization.

Personal data sets the limit of what an estate can offer. In Germany, the Bundesverwaltungsgericht held on 2020-09-16 (6 C 10.19) that the administrator is not a data subject for the debtor's data, so the GDPR's Art. 15 access right does not pass under s.80(1) InsO. For EU estates, legal basis, notices and transfers follow the rules on GDPR and AI training data.

Buyer programs that take wind-down data publish their own terms, among them Ooak Data and Turing. Ooak Data states that wind-down deals close with a director, liquidator or administrator signing, and Turing states that Project Lazarus licenses records from active, winding-down and closed companies non-exclusively, on revenue share with no upfront payment (both checked 2026-11-09).

Selling Estate Data or Not: Benefits, Risks, Downsides and Alternatives for the Officeholder

Selling estate data can add value for creditors, but it carries privacy, employee and buyer risks the officeholder answers for, and leaving the data unsold is a valid outcome. The four lists below set out the benefits, risks, downsides and alternatives.

The three benefits of a data sale for the estate are listed below.

• Proceeds for creditors, as the 23andMe sale order of 2025 shows.
• A price set by competing bids, not an estimate: the Spirit auction of 2026-08-14 (not approved as of 2026-11-09) shows what company data is worth to AI companies.
• A documented decision: a sale order, creditor consent under s.160 InsO, or committee and court approval under IO s.117.

The four risks of a data sale are listed below.

• Refusal or delay, as with the cancelled Spirit hearing of 2026-11-06.
• Employee and third-party data outside the ombudsman's review under the consumer-only 11 U.S.C. 101(41A), and union objections.
• Buyer security: an ombudsman can question a bidder's incident record.
• Re-identification where de-identification is weak or left to the bidder.

The three downsides of a data sale are listed below.

• Cost and time: the Spirit sale has run from the 2026-06-22 procedures order to at least 2026-11-17.
• Retention duties that survive the sale.
• Thin recourse for the buyer, priced in: Spirit's seller representations do not survive consummation.

The four alternatives to a data sale are listed below.

• Not selling: keep the data for the retention periods, then delete it.
• Selling the business without the data, as Character.AI's proposed sale does.
• Licensing non-exclusively or on revenue share, the model Turing states for Project Lazarus.
• Out-of-court routes: a Delaware assignment, or UK dissolution, after which the company's property is bona vacantia (Companies Act 2006 s.1012); the Bona Vacantia Division normally disclaims it or sells it at full market value, and restoration is possible within 6 years (ss.1024(4), 1030(4)).

The same comparison for operating companies sits under alternatives to selling data to AI labs, including not selling.

Referral Fees Around an Estate Data Sale: What Title 11 Restricts

In a US bankruptcy, professionals paid from the estate may not share their compensation with an introducer, and taking money for acting or forbearing to act in the case can be a federal crime. Under 11 U.S.C. 504, professionals compensated under section 503(b)(2) or (b)(4) may not share that compensation, except within the same firm, for petitioning-creditor attorneys and in bona fide public service referral programs.

Under 18 U.S.C. 152(6), knowingly and fraudulently giving, offering, receiving or attempting to obtain money or property for acting or forbearing to act in a title 11 case carries a fine, up to 5 years in prison, or both.

Buyer programs advertise fees for introducing closed companies, among them micro1 and Turing. micro1 states a Defunct Company referral fee of USD 75,000 for deals up to USD 1 million and 7.5 % above, paid after the data is transferred and approved, and Turing states a referral reward of up to USD 50,000 for Project Lazarus (both checked 2026-11-09). Whether such a fee is permitted in a title 11 case is for the court and counsel to decide. The terms are compared among the referral programs of AI data buyers.

Where the Seller Path, Buyers and Law Continue

This hub covers how an estate sells; the pages below cover the seller process, the buyers, and the law after the sale. Every docket entry, statute and figure here was checked against its primary source on 2026-11-09 under the rules on how we source, date and check every figure.

• Outside insolvency: selling data from a shut-down or defunct company
• Every step to sell or license company data to AI companies
• The decision: should you sell or license your data
• PII removal and de-identification before a sale
• Buyer checks: due diligence in an AI data deal
• Every buyer: who buys AI training data
• Programs that license defunct companies' data: company data partnership programs
• Intermediaries that sell data for closing companies: shutdown services
• Estate sales among AI data licensing deals
• The tracker of AI copyright lawsuits over training data
• Ethics and tax: referral fees for advisers

This page is information, not legal advice.

Frequently Asked Questions

What is a bankruptcy sale?

A bankruptcy sale is the sale of estate property outside the ordinary course of business by a trustee or debtor in possession after notice and a hearing under 11 U.S.C. 363(b)(1). Section 363(f) lets the buyer take the property free and clear of interests if one of five conditions is met, and data is sold like other estate property.

Can a bankrupt company sell customer data to an AI company?

Yes, if the sale is consistent with the privacy policy in effect at the filing, or if a court approves it after a consumer privacy ombudsman's review under 11 U.S.C. 363(b)(1) and 332. In FTC v. Toysmart.com (D. Mass. 00-11341-RGS), the 2000 settlement allowed transfer only under four conditions, among them a buyer in substantially the same line of business bound by the privacy policy, as the FTC recalled in its RadioShack letter of 2015-05-16.

Did Google buy Spirit Airlines' data?

No sale has closed: Google LLC was the successful bidder at the 2026-08-14 auction, and the sale hearing is set for 2026-11-17. The court has not approved the sale as of 2026-11-09.

Who controls personal data once an administrator is appointed?

In the UK the company itself stays the data controller, because the administrator acts as the company's agent under Insolvency Act 1986 Sch B1 para 69. In Germany the power of disposal passes to the Insolvenzverwalter under s.80(1) InsO, but the Art. 15 GDPR access right to the debtor's data does not pass to the administrator (Bundesverwaltungsgericht, 6 C 10.19, 2020-09-16).