How it works
From assessment to closing, with court approval at each key step
Each engagement follows a defined sequence. The estate and its counsel control every decision. The court approves the sale.
Phase 1 of 3: Request a confidential data assessment
We review, under a non-disclosure agreement, a high-level description of the debtor's systems, data types, volumes, and retention history.
The output is a short written assessment for the estate and counsel.
Request a confidential data assessment
Steps 1 to 2 in detail
- Step 1
Confidential data assessment
We review, under a non-disclosure agreement, a high-level description of the debtor's systems, data types, volumes, and retention history. We identify likely buyer interest, obvious exclusions, and threshold issues: privacy policies in effect on the petition date, employee data, privileged material, and third-party confidentiality restrictions. The output is a short written assessment for the estate and counsel.
- Step 2
Retention
If the estate proceeds, White Knight Data Advisors is retained under section 327, subject to court approval, with terms approved under section 328. Fees are agreed with the estate and disclosed to the court. We charge a minimum monthly retainer, credited toward the success fee at the end. We work alongside the estate's existing professionals and do not displace counsel, the financial advisor, or the investment banker.
- Step 1
Phase 2 of 3: Inventory, classification, and screening
We inventory the records by system, data type and sensitivity.
We identify categories that should be excluded or protected: structured consumer databases, employee personnel and medical records, privileged communications, data owned by vendors, and material subject to confidentiality agreements or statutory protection.
Remaining data is then handed to an independent de-identification agent, selected with the estate, who applies a written standard.
Steps 3 to 5 in detail
- Step 3
Inventory and classification
[Pending confirmation] - Step 4
Privacy, privilege, and third-party screening
We identify categories that should be excluded or protected: structured consumer databases, employee personnel and medical records, privileged communications, data owned by vendors, and material subject to confidentiality agreements or statutory protection. Remaining data is then handed to an independent de-identification agent, selected with the estate, who applies a written standard.
- Step 5
Ombudsman and stakeholder engagement
Where personally identifiable information is implicated, we support the request for appointment of a consumer privacy ombudsman under section 332 early, so the ombudsman has the time and access the process requires. We prepare materials for the U.S. Trustee, the committee, labor representatives, and counterparties likely to raise concerns.
- Step 3
Phase 3 of 3: Court-supervised section 363 sale
Vetted AI developers and data companies execute NDAs and receive a written description of the data and, where the estate agrees, de-identified samples.
The court approves the sale.
After entry of the sale order, an independent de-identification agent processes the data and certifies the result, and the data is then delivered to the buyer under the terms the court approves.
We never hold copies of the data: it moves directly from the estate to the independent firm, and we confirm the chain of custody in writing.
[Pending confirmation]Steps 6 to 10 in detail
- Step 6
Valuation and marketing
We prepare a data valuation summary and a confidential information memorandum describing the data without exposing it. Vetted AI developers and data companies execute NDAs and receive a written description of the data and, where the estate agrees, de-identified samples.
- Step 7
Bidding procedures and auction
We support counsel in drafting bidding procedures, evaluating a stalking horse, setting qualification criteria for data buyers (including security posture and de-identification capability), and running the auction. Bids are compared on price and on the non-economic terms that drive approval.
- Step 8
Sale hearing
We support counsel with declarations, the asset schedule, the de-identification protocol, proposed order language, and responses to objections.
- Step 9
Closing, transfer, and certification
After entry of the sale order, an independent de-identification agent processes the data and certifies the result, and the data is then delivered to the buyer under the terms the court approves. Certification can be filed with the court for each transfer, as proposed in Spirit.6
- Step 10
Deletion and close-out
We do not hold copies of the data. It moves directly from the estate to the independent de-identification firm, which destroys its working copies under its agreement with the estate. We confirm the chain of custody to the estate in writing and keep the audit trail.
- Step 6
Privacy and security
Built for the ombudsman, the objector, and the court
A data sale is approved on the strength of its safeguards. Our process is designed to be explained in a declaration and defended at a hearing.
US data centers (AWS/Supabase us-east-1)
Intake submissions and data room documents, such as the inventory and certificates, are stored in US data centers (AWS/Supabase us-east-1). Connections are encrypted in transit and may pass through a network location near the visitor.
Encryption
What we host is encrypted in transit (TLS) and at rest by our US hosting providers.
Access control
Data room access is by invitation only, requires two-step verification, and is granted by role, matter by matter.
De-identification and redaction
In each engagement, de-identification is performed by an independent agent, selected with the estate, under a written standard. No full dataset leaves the estate's control before certified de-identification.
Consumer privacy ombudsman
The ombudsman can be given read access to the inventory and a written question-and-answer channel. The grant of access and every question and response are recorded in the audit log.
Court oversight
In a chapter 11 or chapter 7 case, retention and the sale are approved by the court; after confirmation, they proceed under the authority the plan provides. Certification of de-identification can be filed for each transfer.
Audit trail
Every upload, verification, membership change and exclusion is written to a tamper-evident, hash-chained log.
Retention and destruction
We do not hold copies of the data. It moves directly from the estate to the independent de-identification firm, which destroys its working copies under its agreement with the estate. We confirm the chain of custody to the estate in writing and keep the audit trail.
Engagement
Retained by the estate, subject to court approval
White Knight Data Advisors, a White Knight Restructuring practice, is hired by trustees and bankruptcy estates, subject to court approval under sections 327 and 328.
Retained by the estate
We work alongside the estate's existing professionals and do not displace counsel, the financial advisor, or the investment banker. We file the customary declaration addressing disinterestedness under section 327.
Terms disclosed to the court
Fees are agreed with the estate and disclosed to the court. Specific terms are proposed after the confidential assessment.
How we are paid
We charge a minimum monthly retainer, credited toward the success fee at the end. Amounts are proposed after the confidential assessment and are subject to court approval.
Who we serve
For the fiduciaries and professionals who run the case
Our client is the estate: the debtor or debtor in possession, or the trustee, acting with its counsel and advisors. When retained by an estate, we represent the estate only.
Our clients
- Debtors and debtors in possession
- An additional source of value from records you already hold, handled in a way that does not distract from the main sale process.
- Chapter 11 and chapter 7 trustees
- A process to identify and liquidate a non-traditional asset, with an advisor retained by the estate.
- Liquidating and post-confirmation trusts
- Records that remain in the trust's custody may be saleable where the plan and confirmation order permit. We help trustees evaluate authority, process, and value.
- Debtor's counsel
- Support on bidding procedures, ombudsman engagement, the asset schedule, declarations, and order language specific to data sales.
- Financial advisors and chief restructuring officers
- A specialist workstream that adds recovery without displacing your role in the case.
Parties we work with in the process
- Creditors' committees
- We work with committee counsel on whether data value is being captured, and on the privacy and objection risk that could delay a sale.
- Consumer privacy ombudsman
- Where personally identifiable information is implicated, we support an early appointment under section 332, so the ombudsman has the time and access the process requires.
- Secured lenders and claims buyers
- We coordinate with them on whether data is included in the collateral package and how a data sale may affect recoveries.
- Data buyers
- Vetted AI developers and data companies, who sign an NDA approved by the estate before receiving any material.
For counsel and advisors: The Spirit Airlines record: proceedings, objections and responses
Why now
The market is forming now
AI developers began buying internal company records at meaningful scale within the last two years. Prices are not yet settled, buyers are running defined acquisition programs, and the legal and political scrutiny of these sales is increasing. Estates that act while competitive demand is strong, and before the process becomes more contested, are better positioned. In our judgment, the period of strongest pricing is likely measured in months, not years. That is an assessment, not a prediction, and the sources below explain the basis for it.
- Demand
- Supply constraint
- Court process
- Scheduled
Epoch AI projected range for full use of public human text: 2026 to 2032.11
Timeline graphic, 2024 to 2028. The same events are listed in order below.
Demand
Reuters reported the agreement at about $60 million per year, according to a person familiar with the matter.
Source: Reddit licenses content to Google (opens in a new tab)
Demand
Reuters reported Photobucket discussing licenses at 5 cents to $1 per photo and more than $1 per video.
Demand
The Wall Street Journal reported the deal could be worth more than $250 million over five years.
Demand
Forbes reported that shutting-down startups were selling Slack, email, and code to AI labs through SimpleClosure.
Demand
Bloomberg reported SpaceX's AI unit discussed buying data from failed startups.
Source: Another lab considers distressed data (opens in a new tab)
Demand
micro1 announced a commitment to spend $1 billion over 12 months acquiring enterprise operational data.
Demand
MIT Technology Review reported that data prices will likely stabilize in the coming year.
Court process
The court approved the $305 million sale of 23andMe's assets, including genetic data, with privacy safeguards after an ombudsman review.
Court process
Spirit Airlines shut down during its chapter 11 case.
Court process
The court approved appointment of a consumer privacy ombudsman under section 332.
Court process
Google submitted the successful bid of $10 million for de-identified enterprise data; Mercor.io was the alternate bidder at $7.5 million.
Court process
The sale hearing was adjourned after the flight attendants' union objected. Further adjournments followed.
Court process
The ombudsman's supplemental report found approval appropriate from a consumer-privacy perspective after passenger databases were excluded.
Court process
121 members of Congress asked Spirit and Google to delay pending additional employee protections.
Court process · Scheduled
Hearing on approval of the Spirit data sale, Bankr. S.D.N.Y. Scheduled; outcome pending.
Supply constraint
Epoch AI estimated that models will fully use the stock of public human text between 2026 and 2032.
Supply constraint
A Data Provenance Initiative study reported that about 25% of tokens from the highest-quality web sources had become restricted to AI crawlers.
Supply constraint
A Nature study found models degrade when trained indiscriminately on model-generated data.
Supply constraint
Ilya Sutskever said pre-training as we know it will end because "we have but one internet."
Epoch AI projected range for full use of public human text: 2026 to 2032.11
Feb 2024
Demand
Reddit licenses content to Google
Reuters reported the agreement at about $60 million per year, according to a person familiar with the matter.13
Source: Reddit licenses content to Google (opens in a new tab)
Apr 2024
Demand
Per-image pricing appears
Reuters reported Photobucket discussing licenses at 5 cents to $1 per photo and more than $1 per video.14
May 2024
Demand
News Corp and OpenAI
The Wall Street Journal reported the deal could be worth more than $250 million over five years.15
Jun 2024
Supply constraint
Epoch AI projects a data limit
Epoch AI estimated that models will fully use the stock of public human text between 2026 and 2032.11
Jul 2024
Supply constraint
The web begins to close
A Data Provenance Initiative study reported that about 25% of tokens from the highest-quality web sources had become restricted to AI crawlers.16
Jul 2024
Supply constraint
Limits of synthetic data
A Nature study found models degrade when trained indiscriminately on model-generated data.17
Show all 19 events
Dec 2024
Supply constraint
"Peak data"
Ilya Sutskever said pre-training as we know it will end because "we have but one internet."18
Jun 2025
Court process
23andMe sale approved
The court approved the $305 million sale of 23andMe's assets, including genetic data, with privacy safeguards after an ombudsman review.19
Apr 2026
Demand
Wind-down data market emerges
Forbes reported that shutting-down startups were selling Slack, email, and code to AI labs through SimpleClosure.7
May 2, 2026
Jul 23, 2026
Court process
Ombudsman appointed in Spirit
The court approved appointment of a consumer privacy ombudsman under section 332.5
Aug 14, 2026
Aug 2026
Court process
First adjournment
The sale hearing was adjourned after the flight attendants' union objected. Further adjournments followed.3
Sep 17, 2026
Demand
Another lab considers distressed data
Bloomberg reported SpaceX's AI unit discussed buying data from failed startups.12
Source: Another lab considers distressed data (opens in a new tab)
Oct 5, 2026
Court process
Ombudsman supports approval
The ombudsman's supplemental report found approval appropriate from a consumer-privacy perspective after passenger databases were excluded.6
Oct 8, 2026
Court process
Congressional scrutiny
121 members of Congress asked Spirit and Google to delay pending additional employee protections.4
Oct 9, 2026
Demand
A 12-month, $1 billion program
micro1 announced a commitment to spend $1 billion over 12 months acquiring enterprise operational data.9
Oct 13, 2026
Demand
Prices expected to settle
MIT Technology Review reported that data prices will likely stabilize in the coming year.8
Nov 6, 2026Scheduled
Court process
Spirit sale hearing
Hearing on approval of the Spirit data sale, Bankr. S.D.N.Y. Scheduled; outcome pending.6
The Spirit Airlines record: proceedings, objections and responses →
Frequently Asked Questions
Process
Who are the buyers?
Buyers include frontier AI developers, AI data companies that build training and evaluation environments, and technology companies training their own models. Spirit's auction drew Google and Mercor.io, and a third AI data company filed a notice of intent to bid.5 We qualify buyers on financial capacity, security posture, de-identification practice, and willingness to accept use and onward-transfer restrictions.
What data qualifies?
Most valuable are long-running, connected records of real work: email, chat, shared documents, tickets and case histories, project and workflow systems, operational logs, code repositories, and domain-specific systems of record. Ten to twenty years of history and unusual industries tend to add value. Structured consumer databases are usually excluded. Value depends on depth and variety, not volume alone.8
How long does the process take?
The timetable depends on the case, the data, and the objections. In Spirit, the bidding procedures order was entered June 22, 2026, the auction was held August 14, and the sale hearing originally set for August 19 has been adjourned to November 6.45 Our aim is to complete inventory, exclusions, de-identification design, and stakeholder engagement before marketing begins, which is where most of the delay in Spirit arose.
Can a data sale run alongside the main asset sale?
Yes. Spirit marketed its de-identified data under the same bidding procedures order that governed other assets, as a separate lot with its own auction and hearing.5 A data sale can also proceed later in the case, or in a liquidating or post-confirmation trust where the plan permits.
What if the debtor has already begun to destroy or abandon records?
Contact us promptly. Litigation holds, retention obligations, and plan provisions may already govern the records. We can help counsel assess what remains, whether a sale is still practical, and whether any relief from a retention or destruction order is appropriate.
Privacy and safeguards
When is a consumer privacy ombudsman required?
Under section 363(b)(1), if the debtor disclosed a privacy policy prohibiting transfer of personally identifiable information and that policy was in effect on the petition date, the sale of that information must either be consistent with the policy or be approved after appointment of an ombudsman under section 332 and appropriate findings by the court. Many data sales are structured to exclude consumer PII entirely. Even so, courts and the U.S. Trustee may favor appointment where consumer data could be present in the records, as occurred in Spirit by stipulation.5 We generally recommend addressing the question at the outset rather than near the sale hearing.
What about employee data? The Code's privacy provisions focus on consumers.
That is correct, and it is the most active issue in this area. The definition of personally identifiable information in section 101(41A) is framed around consumers, and the Spirit ombudsman expressly did not assess employee risk.6 Unions in Spirit relied instead on section 107(b), collective bargaining agreements, and sector statutes.5 We review personnel, payroll, medical, disciplinary, grievance, and union-related records for exclusion or additional protection, and we recommend early engagement with labor representatives where they exist.
How is confidentiality protected during marketing?
Prospective buyers sign an NDA approved by the estate before receiving any material. They receive a written description of the data and, where the estate agrees, samples that have been de-identified first. No full dataset is released before entry of a sale order and completion of certified de-identification.
Court and legal
Is operating data property of the estate that can be sold under section 363?
Generally, records the debtor created or owns in the ordinary course are property of the estate under section 541 and may be sold under section 363(b) after notice and a hearing. The threshold question in each case is whether specific data is in fact estate property. Data generated by a vendor's platform, licensed datasets, and material subject to confidentiality agreements may belong to others or carry restrictions. In Spirit, a software vendor and an engine manufacturer raised exactly those issues.5 We identify those categories during inventory, before the asset schedule is filed.
Does a sale expose the estate to post-closing liability?
A sale order can provide free and clear relief under section 363(f) and good-faith purchaser protection under section 363(m), but privacy policy commitments, state de-identification standards, and employment law obligations may follow the data regardless.20 Buyer-side covenants on re-identification, use restrictions, and onward transfer, together with independent certification, reduce that exposure. Counsel should evaluate residual risk in each case.
Retention
How is White Knight Data Advisors retained?
We are hired by the debtor or trustee, subject to court approval under section 327, with terms approved under section 328. Fees are agreed with the estate and disclosed to the court. We charge a minimum monthly retainer, credited toward the success fee at the end. We file the customary declaration addressing disinterestedness under section 327.
Insights and resources
Selected reading
Sources we rely on. Links go to the original publisher. Inclusion does not imply endorsement by the author or publisher.
Spirit Airlines data sale
- [1]Google to buy Spirit Airlines business data for $10 million (opens in a new tab)
Google says it will use de-identified Spirit internal data for product development and AI training.
- [2]Google Aims to Boost AI With Purchase of Spirit Airlines Data (opens in a new tab)
The asset schedule and the exclusion of passenger and loyalty data.
- [3]US court delays hearing on Google's purchase of Spirit Airlines data as union objects (opens in a new tab)
The first adjournment after the flight attendants' union objected.
- [4]Court delays hearing on Google's purchase of Spirit data (opens in a new tab)
Hearing moved to November 6 following a letter from 121 members of Congress.
- [5]The Spirit Airlines deidentified data sale: auction results, objections, and the September 30 hearing (opens in a new tab)
Docket-level review of bids, objections, and the ombudsman's first report.
- [6]Spirit Airlines Case Update: The Data Sale Slips to November (opens in a new tab)
The ombudsman's supplemental report, independent de-identification, and the November 6 hearing.
- Spirit Data Sale to Google Shows Gaps in Employee Protections (opens in a new tab)
Former Bankruptcy Judge Robert Drain describes the sale as the first he has seen of "information for information's sake."
The market for operating data
- [7]AI's New Training Data: Your Old Work Slacks And Emails (opens in a new tab)
Startups in wind-down are selling workspace data to AI labs.
- [8]AI labs are buying data from dead startups to train their models (opens in a new tab)
How buyers value workspace data, and why prices remain unsettled.
- [9]micro1 announces commitment to spend $1B on enterprise data acquisition over the next 12 months (opens in a new tab)
Company announcement of a 12-month enterprise data program.
- [10]What Fetches Top Dollar On The Dead Startup Data Marketplace? (opens in a new tab)
Which data types command premiums, according to a marketplace operator.
- [12]SpaceX Discusses Buying Data for AI Models From Failed Startups (opens in a new tab)
Another frontier developer reportedly considering distressed-company data.
- [13]Reddit in AI content licensing deal with Google (opens in a new tab)
A reported $60 million annual license for training data.
- [14]Inside Big Tech's underground race to buy AI training data (opens in a new tab)
Per-unit pricing discussed for image and video libraries.
- [15]OpenAI, WSJ Owner News Corp Strike Content Deal Valued at Over $250 Million (opens in a new tab)
One of the largest reported content licenses.
Data scarcity
- [11]Will we run out of data? Limits of LLM scaling based on human-generated data (opens in a new tab)
Projects full use of public human text between 2026 and 2032.
- [16]The Data That Powers A.I. Is Disappearing Fast (opens in a new tab)
Publishers restricting AI crawlers, based on the Data Provenance Initiative study.
- [17]AI models collapse when trained on recursively generated data (opens in a new tab)
The limits of training on synthetic output.
- [18]OpenAI cofounder Ilya Sutskever predicts the end of AI pre-training (opens in a new tab)
The "peak data" argument.
Bankruptcy precedent and practice
- [19]Memorandum Opinion, In re 23andMe Holding Co., No. 25-40976 (opens in a new tab)
Approval of a genetic data sale with privacy conditions.
- FTC Requests Bankruptcy Court Take Steps to Protect RadioShack Consumers' Personal Information (opens in a new tab)
Regulatory position on customer data in a 363 sale.
- FTC Seeks Protection for Personal Customer Information in Borders Bankruptcy Proceeding (opens in a new tab)
The FTC's letter to the consumer privacy ombudsman.
- [20]Most Privacy Programs Plan for Vendors, Deals, and Incidents. Few Plan for What Happens to Company Data If the Business Fails. (opens in a new tab)
Practical guidance for debtors, lenders, and buyers.
11 U.S.C. §§ 332, 363, 327, 328: § 332 (opens in a new tab), § 363 (opens in a new tab), § 327 (opens in a new tab), § 328 (opens in a new tab)
Statutory text.