Updated October 2026
For bankruptcy counsel: data-sale precedents and who buys
A bankruptcy attorney weighing a data sale to an AI company now has a filed record to read. Spirit Airlines' sale runs inside In re Spirit Aviation Holdings, No. 25-11897 (SHL), before Judge Sean H. Lane in the Southern District of New York. It stood unapproved as of 2026-10-14, with a sale hearing set for 2026-11-06. This page lays out what was filed and by whom, without our conclusions about any of it.1,2
Case ledger
The Spirit data sale, filing by filing
Procedures: the bidding procedures motion was filed 2026-05-27 (Dkt. 1117) and the order entered 2026-06-22 (Dkt. 1213). The US Trustee appointed Lucy L. Thomson as consumer privacy ombudsman on 2026-07-17 (Dkt. 1350); the court approved her appointment on 2026-07-23 (Dkt. 1380).3,4
Auction and order: the auction notice dates the auction 2026-08-14, though the ombudsman's report says 2026-08-13. Google opened at $5.0M and finished as successful bidder at $10.0M cash; Mercor was named alternate at $7.5M. The proposed sale order (2026-08-17, Dkt. 1469) carried, as filed, no privacy conditions, no bar on re-identification and no duty to report back to the court.5,6
Objections and a late bid: six objections or joinders arrived between 2026-08-18 and 2026-09-04, from AFA-CWA, Springshot, PAFCA, International Aero Engines, IAM with TWU Local 570, and ALPA. micro1 filed a $12.5M notice of intent on 2026-09-03 (Dkt. 1556).7,8
The ombudsman's track: her first report (2026-09-08, Dkt. 1581) grouped conditions into five categories. Google argued that her role covers only sales of personally identifiable information. On 2026-09-09 (Dkt. 1594) Google agreed to strip five datasets at the same price, and on 2026-10-05 the ombudsman recommended approval, with Tonic.ai certifying de-identification to the court before each transfer.9,10,11,12
| Fact | Value and source |
|---|---|
| Spirit Airlines bankruptcy case | In re Spirit Aviation Holdings, No. 25-11897 (SHL), Bankr. S.D.N.Y., Judge Sean H. Lane; Chapter 11 filed 2025-08-29 |
| Bidding procedures for the data sale | Bidding procedures motion filed 2026-05-27 (Dkt. 1117); order entered 2026-06-22 (Dkt. 1213) |
| Objections to the Spirit data sale | Six objections or joinders filed 2026-08-18 to 2026-09-04: AFA-CWA, Springshot, PAFCA, International Aero Engines, IAM and TWU Local 570, and ALPA |
| Ombudsman's recommendation | On 2026-10-05 the ombudsman recommended approving the sale to Google. Tonic.ai de-identifies the unstructured data and files a certification with the court before every transfer. She did not assess risks to employees or third parties |
A second docket
Character.AI: a consumer-data case on a shorter clock
Character.AI is in Chapter 11 in Delaware, No. 26-11603 (BLS), before Judge Brendan L. Shannon, with a proposed bid deadline of 2026-11-20, an auction on 2026-11-23 and a sale hearing the next day. Disney is the stalking horse for a non-exclusive license to code and patents, and the term sheet leaves out user data. Because its records are users' chats, we treat it as context for counsel, not as a model for selling a company's internal mail.13,14
Published commentary
What firms and commentators have put in writing
Two law firm alerts address the topic directly: Morgan Lewis, "Bankruptcy Issues Raised by Generative AI: Ownership, Licensing, and Asset Values" (2026-06-29), and Spencer Fane, "The New Distressed Asset: Navigating the Unique Complexities of AI Company Bankruptcies" (2026-07-07). We cite their titles and dates only; read them for their analysis.15
In MIT Technology Review, Greg Ewing, an attorney who advises AI startups, called data from dead startups "legally radioactive". A technology law post from FKKS adds a later-stage point: if the company is acquired afterwards, a prior data sale surfaces in diligence and the acquirer will want the paper trail.16,17
Counterparties
Who sits across the table
In court, the bidders so far are Google, Mercor and micro1. Outside court, SimpleClosure says its AssetHub buyers are AI foundation labs, reinforcement learning environment builders and other technology companies, and License My Data says it works with trustees, administrators, liquidators, wind-down officers and their counsel.5,8,18,19
FAQ
Questions, answered with sources
In re Spirit Aviation Holdings, No. 25-11897 (SHL), Bankr. S.D.N.Y., Judge Sean H. Lane. The Chapter 11 petition was filed 2025-08-29.1
AFA-CWA, Springshot, PAFCA, International Aero Engines, IAM with TWU Local 570, and ALPA, in six objections or joinders filed 2026-08-18 to 2026-09-04.7
On 2026-10-05 she recommended approving the sale to Google, with Tonic.ai de-identifying the unstructured data and certifying it to the court before every transfer. She did not assess risks to employees or third parties.12
Morgan Lewis (2026-06-29) and Spencer Fane (2026-07-07) both issued alerts on generative AI and distressed assets.15
FKKS writes that it will come up in diligence, and that an acquirer will expect to see the record of it.17
The proposed schedule sets bids due 2026-11-20, the auction on 2026-11-23 and the sale hearing on 2026-11-24.13
We do not answer legal questions. Ask the licensing company: their team reviews this with you before anything is signed.
We do not answer legal questions. Ask the licensing company: their team reviews this with you before anything is signed.
Before you sign
Legal questions go to the licensing company
We do not answer legal questions. Ask the licensing company before you sign: their team reviews these with you.
Questions for this kind of business
- Does the estate's interest reach employee mailboxes and chat history, or only records the company created?
- Does a non-exclusive license need notice and a hearing under Section 363 in the same way as a sale?
- Would the court appoint a consumer privacy ombudsman under Section 332 when the archive is de-identified first?
- How should privileged communications inside the archive be screened before any bidder sees a sample?
- Who owns this data: the company, an estate, or someone else?
- Is a consumer privacy ombudsman, court approval, or notice and a hearing needed?
- How do CCPA, GDPR, UK GDPR and state privacy laws apply, and is de-identified data still personal information?
- How are employee data, union contracts and NLRA questions handled?
- Do customer, vendor or platform contracts, NDAs or API terms restrict this?
- Could the data include privileged material or trade secrets?
- What are the trustee's, assignee's, receiver's or board's duties, and who receives the proceeds?
- Which proceeding fits: an ABC, Chapter 7, Chapter 11 or a dissolution?
Questions for any buyer
- Is the license exclusive, and for how long?
- Can you sublicense the data, and to whom?
- Which AI labs will receive it, and will you tell us?
- How long do you keep it, and how is it deleted?
- What is your liability cap, and who indemnifies whom?
- Will the contract ban re-identification of people in the data?
- Who removes personal data, by what method, and do we approve it first?