Assignment for the benefit of creditors: what happens to your company's data

How an ABC works

The board, and shareholders where the company's documents require it, approve the assignment. The company signs an assignment agreement that transfers all of its property to the assignee, along with a list of its creditors and assets. The assignee then runs a sale, notifies creditors, sets a deadline for claims and pays out in order of priority.

Each state has its own rules. California's process runs without a court, and sales there typically take 30 to 45 days. BevNET, 2022, checked Nov 8, 2026 (opens in a new tab) Delaware ABCs are filed in the Court of Chancery, and the assignee must provide a bond, an inventory of the company's assets and two separate appraisals. Daily DAC, 2021 (updated 2023), checked Nov 8, 2026 (opens in a new tab) Many startups are Delaware corporations based in California, so ask your attorney which state's rules apply.

Some ABCs are prepackaged: a buyer agrees terms with the assignee before the assignment, and the sale closes as soon as it takes effect. That's the easiest point to add a data license, because the asset list is being written anyway.

ABC or Chapter 7: who controls the data

Either way, the founders and the board lose the power to sign once the process starts. If the data is going to be part of the outcome, start the conversation before then.

Before you sign the assignment

1. Keep the data alive. Don't cancel Slack, Google Workspace or Microsoft 365, and check retention settings. The assignee will need admin access to export anything.
2. Get a figure. Registering with micro1 costs nothing. A proposal tells you, the board and the assignee whether the data belongs on the asset list. If the company had fewer than 30 staff, look at SimpleClosure's marketplace instead.
3. Tell the assignee. Put the data and any proposal on the asset schedule. An assignee's job is to get the most for creditors, and a buyer already in the frame helps.
4. Read your privacy policy and staff notices. They govern what the data can be used for. De-identification, with real names replaced before a frontier AI lab sees anything, is what makes licensing possible. My de-identification guide explains it.
5. Take advice on duties to creditors. When a company can't pay its debts, its directors must weigh creditors' interests. Don't move assets around, or sign a license privately, without your attorney's view.

If you're an assignee

Workplace archives are an asset class that didn't exist a few years ago. AI training data companies such as micro1 license de-identified email, Slack, Teams and project data from companies that have stopped operating, and micro1 lists $100K to $3M+ per company. micro1 referral partner portal, Opportunities (refer.micro1.ai/opportunities), checked Nov 8, 2026 micro1 handles the export and de-identification, and the license sits alongside any going-concern or asset sale. If an estate you're handling has years of workplace data, get a quote before the accounts are shut down.

I'm happy to talk through how the process works for an estate. Send me a message.

Common questions about ABCs and company data

What is an assignment for the benefit of creditors?

A state-law alternative to bankruptcy. An insolvent company transfers all its assets to an assignee, who sells them and pays the creditors in order of priority. It's widely used to wind down venture-backed startups.

Who owns company data after an assignment for the benefit of creditors?

The assignee. The assignment transfers all of the company's property, including its rights in its records and archives, so only the assignee can sell or license them afterwards.

Can founders sell company data before an ABC?

The company can license its data while the board still controls it, but if it can't pay its debts, directors have to consider creditors first. In practice it's usually best to get a quote, then let the assignee sign, so the money goes through the estate.

Is an ABC better than Chapter 7 for selling data?

An ABC is usually faster and quieter, and the company chooses the assignee. Chapter 7 adds a court and a trustee. Either can include a data license. Ask your attorney which suits the company's debts and liens.

What happens to employees' personal data in an ABC?

The company's privacy promises and notices still apply. Data licensed for AI training is de-identified first, with names and contact details replaced, and the license should say who handles requests from former staff.

Getting a figure

Registering costs nothing and doesn't commit you. Say in the application that the company is winding down or has stopped operating.

This is a general explanation of US practice, not legal advice. I'm not a lawyer. I'm not employed by micro1. If a company signs up through my introduction, micro1 may pay me a referral fee, which costs you nothing and doesn't change your terms.