As AI vendors become integral to business operations, their potential bankruptcy creates complex challenges under a Bankruptcy Code that has yet to fully adapt to AI technology. The first of a two-part series, this article focuses on intellectual property considerations: specifically, how companies that license AI tools or models can protect their continued access when a vendor enters bankruptcy. Among the key risks is a debtor’s ability to reject executory contracts, which could strip away the ongoing services that make a licensed AI tool usable, even where the bare license itself survives. Proactive contractual measures including escrow arrangements, and source code and deployment rights can mitigate these risks before a vendor crisis occurs.
