Directors' duties in the zone of insolvency: do they include data assets?

Do directors' duties in the zone of insolvency cover data assets?#

Directors' duties in the zone of insolvency cover data assets because those duties run to the corporation, and the corporation's records are among its assets. Support tickets, CRM histories, engineering records, and email and chat archives belong to the company even when no line on the balance sheet shows them.

What changes as a company nears insolvency is not the list of assets but who bears the loss if value is destroyed. Board decisions that erase or give away records, often made to cut costs, can look different in hindsight once creditors are the parties left with residual claims.

The duty map: whom directors serve as finances weaken#

The duty map below summarizes the general position in Delaware, where many venture-backed and private equity-owned companies are incorporated. Other states differ, so counsel should confirm the rules where your company is organized.

What Delaware law means for the board in practice#

Board counsel usually explain this framework through Delaware case law, including the decision commonly called Gheewalla, the case most often cited on creditor claims against directors near insolvency. The details of standing and remedies are for counsel. The practical point for the board is that the zone of insolvency is when careful process starts to matter most.

Being near insolvency does not oblige directors to stop taking business risks or to run the company for creditors alone. It does mean that decisions which shift value away from the corporation, or destroy assets without reason, will be judged by a reader who already knows the company failed.

Why boards overlook data assets#

Boards overlook data assets mainly because accounting rules keep them off the balance sheet. Under ASC 350-30-25-3, costs of internally developing intangible assets that are not specifically identifiable, or are inherent in a continuing business, are expensed as incurred, so years of support, sales and engineering records show no book value. Budget pressure compounds the problem: the wind-down plan lists subscriptions as costs to cut, and nobody lists the records those subscriptions hold.

Recent reporting suggests such records can carry value outside the company. Forbes reported in April 2026 that a closed company's remaining digital records, including internal chat, project-tracking tickets and emails, became items for sale to AI developers after its wind-down, and reporting in August 2026 described a bankruptcy auction for an airline's internal business data.

• 1Help desk tickets with escalations and resolutions.
• 2CRM histories with deal notes, calls and outcomes.
• 3Source code with reviews, issues and release history.
• 4Email, chat and internal wiki archives.
• 5Job, dispatch, order and quality records from operating systems.

Board decisions that affect records near insolvency#

Board decisions near insolvency often touch records without anyone naming them as data decisions. None of the decisions below is wrong in itself; the risk comes from making them without information, without weighing the records' value, or with an unmanaged conflict.

What a defensible process looks like#

A defensible board process for data assets is informed, documented and free of unmanaged conflicts. It does not require the board to license or sell anything; it requires the board to know what the company holds before letting any of it go.

Timing matters as much as content. A preservation instruction issued after the admins have left, or an inventory ordered after subscriptions lapsed, documents a loss instead of preventing one. Put both on the agenda at the first meeting where the board discusses runway in months rather than years.

• 1Order an inventory of systems, record types, years covered and renewal dates.
• 2Issue a preservation instruction that pauses deletion rules and device wipes.
• 3Ask whether any record family could carry value, using a metadata-only assessment.
• 4Identify privacy promises, customer contracts and privileged material that limit options.
• 5Route any insider offer for code or data to disinterested directors with advice.
• 6Minute the information considered, the alternatives and the reasons for each decision.

Illustrative: an investor director and an insider offer#

Illustrative: a fictional venture-backed software company is running out of cash. An investor director sits on the board, and the founder proposes that a new entity he controls buy the codebase and the support archive for a nominal amount before the company enters an ABC.

Outside counsel advises treating the offer as a conflicted transaction. The disinterested directors pause deletion rules on the help desk and chat tools, commission an inventory, and ask for a metadata-only view of whether the support and engineering records could be licensed. The view suggests potential interest, so the board declines the insider offer, records its reasons and hands the preserved records and inventory to the assignee, who can test the market.

The same preserved records later help the directors. Board materials, approvals and email history show that each decision was informed, which is the evidence directors need if their choices are questioned.

How SourceX fits into a board's process#

SourceX can give a board an early, metadata-only view of whether its records fit current licensing demand. Nothing is shared during that fit check, and SourceX gives no valuation or price in advance; value is known only once a buyer engages.

The SourceX Enterprise Data Value Framework rates records qualitatively on drivers such as uniqueness, domain expertise, human-generated signal, recency, rights and AI utility, with preparation cost and privacy burden reducing net value. If the board or a successor decides to proceed, the SourceX five-step transaction keeps approval with whoever holds authority at that point.