Assets Grow Feet

AuthorDavid J. Cook
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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