Chapters
What happens to company records in Chapter 7 compared with Chapter 11
Chapter 7 versus Chapter 11 is usually explained as liquidate versus reorganize. That skips one asset: the company's email, chat and document archive.
Here is how each chapter treats it.
In this guide
01
Who holds the keys
Who controls assets
Chapter 7
A trustee
Chapter 11
The debtor in possession, often with a CRO
Goal
Chapter 7
Sell non-exempt assets for creditors
Chapter 11
Reorganize or sell as a going concern
Who decides to market the archive
Chapter 7
The trustee
Chapter 11
Management, with court approval for the sale
Systems running?
Chapter 7
Usually shutting down
Chapter 11
Usually still live
AI data sales so far
Chapter 7
None reported
Chapter 11
Spirit Airlines (archive), Character.AI (code)
| Chapter 7 | Chapter 11 | |
|---|---|---|
| Who controls assets | A trustee | The debtor in possession, often with a CRO |
| Goal | Sell non-exempt assets for creditors | Reorganize or sell as a going concern |
| Who decides to market the archive | The trustee | Management, with court approval for the sale |
| Systems running? | Usually shutting down | Usually still live |
| AI data sales so far | None reported | Spirit Airlines (archive), Character.AI (code) |
02
Whether the servers stay on
An operating Chapter 11 debtor keeps paying for its systems. In Chapter 7 the company has stopped, staff are gone and subscriptions lapse. Unpaid workspaces get deleted, so a trustee has to act fast to preserve anything worth selling.
03
Where data sales have happened
Both reported AI-related court cases are Chapter 11: Spirit's archive sale and Character.AI's code license. Outside court, most data deals close in voluntary wind-downs through services like SimpleClosure, typically $10K to $100K.
If you are choosing a route out of court, see ABC or Chapter 7.
FAQ
Questions, answered
Which chapter is better for selling a data archive?
Chapter 11 keeps systems live and has the only reported archive sale so far. Chapter 7 can work if the trustee preserves the data quickly. Your counsel decides the chapter on wider grounds.
Can a Chapter 7 trustee sell company email?
Potentially, as an estate asset, subject to contracts, privacy law and court approval.
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Sources
Every number on this page links back to one of these.
- 1U.S. Courts: Chapter 7 bankruptcy basicsuscourts.gov
- 2U.S. Courts: Chapter 11 bankruptcy basicsuscourts.gov
- 3Chapter11Cases (Stretto): docket report on the Spirit Airlines de-identified data salechapter11cases.com
- 4PPC Land: Character.AI faces 40 attorneys general over who can buy its users' chatsppc.land
- 5aitrainer.work: selling a closed company's dataaitrainer.work
- 6MIT Technology Review: AI labs are buying data from dead startups (13 Oct 2026)technologyreview.com
- 7Forbes: AI's new training data is your old work Slacks and emails (16 Apr 2026)forbes.com
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