Assets Grow Feet

• Author: David J. Cook
• Pages: 7-10

Assets Grow Feet

Insolvency puts at risk the assets of the insolvent company, which includes

the customer list, proprietary information, intellectual property, hard

assets, inventory, mailing list, key vendor data, and the digital “rolodex.” Any

of these might walk out the back door when no one is watching.

Customer Data and Intellectual Property

Presume that insiders, key sales personnel, clerks, or others have illicitly

copied and taken the customer list and all proprietary data. In a digital

world, we are talking about scraping the company servers of every secret

and placing the data on a thumb drive or downloading it to someone’s smart-

phone. Aside from sales information, expect that the stolen information

includes all proprietary data, such as market pricing, cost and sale informa-

tion, formulas, key distributor agreements, and anything else necessary to

reconstitute the business in another corporate shell.

Pre-digital customer lists consisted of round rolodex files maintained on

employee desks. Each card in the rolodex listed a customer and key personal

details. When an employee was about to leave, management would hold onto

the rolodex, the physical repository of data. Some employees would man-

age to grab the company rolodex on their way out the door. (Those of you

from the digital generations have probably never seen a rolodex, or, for that

matter, a ten key punch, a manual or electric typewriter, or perhaps even an

analog wrist watch, but the rolodex was the company’s intellectual property

treasure trove.)

Today, expect that insiders will steal key proprietary software, either

by removing it completely or by making a copy. In businesses that offer IT

solutions as their products, the software (and its many incarnations) will

exit the back door by 5:00 p.m., or sooner, when the owners announce the

end of the business.

If the debtor is a manufacturer, the key assets are tools and dies (and

computer programs to run these million dollar machines), custom made

manufacturing equipment (and related programs), finished goods attached

to a pending sale, work in progress that is very close to completion, and,

of course, valuable “raw goods,” molds, and additional software that runs

the manufacturing process. Osama bin Laden was easier to find than these

company assets after closure. Inventory and insurance records likewise

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