Selling company data in a Texas Chapter 11

Texas has become one of the busiest Chapter 11 venues in the country. Large cases cluster in Houston and Dallas, and small business filings, including many under Subchapter V, are spread across all four districts. If your company is filing, or already in a case, in Texas, the rules for selling or licensing operational data are the same federal rules that apply everywhere, but the local practice and the state's privacy law shape how it plays out.

General information, not legal advice. Local rules, judges' procedures and Texas law change; your bankruptcy counsel should advise on your case.

The four districts and where cases land

Texas has four federal judicial districts, each with its own bankruptcy court: the Southern District (Houston, Corpus Christi and others), the Northern District (Dallas, Fort Worth, Lubbock and others), the Western District (Austin, San Antonio, El Paso and others), and the Eastern District (Plano, Tyler, Beaumont and others).

Venue for a corporate debtor generally depends on the debtor's domicile, principal place of business or principal assets, or the pendency of an affiliate's case (28 U.S.C. § 1408). Larger companies with Texas affiliates have historically used the Southern District's complex case procedures. Smaller operating businesses usually file where they're based.

For a data sale, venue matters mostly for timing and procedure. Each court has its own local rules on notice, hearing settings, emergency motions and proposed orders. Your counsel will know whether a given judge prefers a stand-alone motion, a combined bid-procedures-and-sale motion, or an agreed order.

Complex cases and the speed they allow

Texas complex case procedures are built for speed: regular hearing days, a clear process for emergency and expedited matters, and judges used to large asset sales. For a data license, that can mean a predictable hearing date once notice runs. But speed cuts both ways. Complex cases also tend to have active creditors' committees, sophisticated DIP lenders and tight milestones. A data sale in a large Houston case should be briefed to the lender and committee before filing, not after. Our guide on working with the creditors' committee has a briefing template.

Subchapter V in Texas

Texas also sees many Subchapter V cases from small and mid-size businesses: oilfield services firms, contractors, medical practices, trucking companies and restaurant groups. A Subchapter V trustee is appointed in each case. The 90-day plan deadline means a data license has to be identified early to help. The Subchapter V asset sales guide walks through a 90-day calendar.

Texas privacy law

The Texas Data Privacy and Security Act (TDPSA) took effect in July 2024. It applies to many businesses that process personal data of Texas residents and that aren't small businesses as defined by the U.S. Small Business Administration, though some provisions on the sale of sensitive data reach small businesses too. It gives consumers rights over their personal data and restricts the sale of personal data without notice and, for sensitive data, consent.

Two points matter for a bankruptcy data sale:

• De-identified data is treated differently. The TDPSA generally excludes de-identified data from many obligations when the controller takes reasonable measures to ensure it can't be linked to an individual, publicly commits not to re-identify it, and contractually binds recipients. That maps closely onto how a well-structured data license works. See de-identifying company data in bankruptcy.
• Business records are not the same as consumer data. Many operational records (tickets, internal email, process documents) concern business activity. They still contain personal data such as employee and contact names, which is why removal comes first.

Texas also has a data breach notification statute and laws on biometric identifiers. Biometric data, if any, should be excluded entirely from a data set.

The Bankruptcy Code's own privacy rule, § 363(b)(1), applies on top of state law. If your privacy policy prohibits transferring personally identifiable information and the sale would transfer it, the court can approve only consistently with the policy or after a consumer privacy ombudsman is appointed.

Industries that come up often in Texas

Texas debtors frequently come from energy services, construction, healthcare, logistics, hospitality and retail. Each has distinct data:

• Energy and oilfield services: dispatch records, field tickets, safety reports and maintenance logs. Customer and well-site identifiers have to be removed, and some data may be subject to confidentiality under master service agreements.
• Construction: bids, RFIs, change orders and project correspondence. Owner and subcontractor names come out; the workflow stays.
• Logistics: load boards, carrier communication and claims records. Often rich, consistent and attractive to buyers.
• Healthcare: patient data is out of scope. Only non-patient operational records may be considered. Read our healthcare guide.

Lenders in Texas cases

Many Texas operating companies have asset-based or reserve-based lenders with blanket liens covering general intangibles. Expect the lender to claim the data and its proceeds as collateral. The usual solutions are lender consent with proceeds applied to the DIP or pre-petition debt, a negotiated carve-out for the estate, or an agreed allocation if other assets are sold too. See how data sale proceeds flow into the estate.

A Texas timeline

For a mid-size Chapter 11 in Houston or Dallas, a typical schedule:

1. Week 1: Engagement, NDA, systems inventory, review of the TDPSA position and privacy policies.
2. Weeks 1–3: De-identification testing and buyer outreach; briefing the DIP lender.
3. Week 3 or 4: Motion under § 363(b), with a marketing declaration and proposed order.
4. Weeks 6–8: Notice period (generally 21 days under Rule 2002(a)(2) unless shortened), hearing, order and delivery.

Emergency or expedited relief is possible for cause, but a data license rarely justifies it unless cash is at risk.

What to send your counsel

Before your counsel files, they'll want: the list of systems and date ranges, every version of the privacy policy, the security agreement and DIP order, the top customer contracts, and the bids. Our counsel brief summarizes the issues in two pages, and your counsel can refer the case directly.

A note on Texas state-court receiverships

Some distressed Texas businesses never file bankruptcy and instead end up in a state-court receivership. A receiver may sell assets under court supervision, but the process, notice requirements and buyer protections differ from § 363. If your company is in a receivership, ask the receiver and counsel how a data license would be approved.

Frequently asked questions

Do Texas bankruptcy courts approve data sales?

They apply the same § 363 standard as other courts: a sound business reason, adequate notice, a fair process and compliance with the privacy limits. Data licenses are evaluated like other intangible asset sales.

Does the Texas Data Privacy and Security Act stop a bankruptcy data sale?

Not by itself. It regulates the sale of personal data. A license of properly de-identified data, with contractual bans on re-identification, generally sits outside many of its obligations. Counsel should confirm for your facts.

Should a Texas company file in Houston for a faster sale?

Venue is driven by the statute and the case as a whole, not by a single asset sale. Counsel will choose venue based on where the debtor and its affiliates are and on the overall strategy.

Can a Texas Subchapter V debtor sell data?

Yes, with notice and a hearing. The Subchapter V trustee will want to understand how the proceeds support the plan.

How fast can a Texas data sale close?

Often six to eight weeks from engagement to order, sometimes faster if the lender and committee agree in advance.

This guide is general information, not legal, tax or financial advice, and reading it does not create an attorney-client relationship. Bankruptcy outcomes depend on the facts, the court and the parties; nothing here promises price, timing or court approval. Talk to your bankruptcy counsel about your case.