Between 2023-25, venture capital funding for
artificial-intelligence (AI) companies surged wellinto the
billions.This investment has produced two distinct categories of
companies that could be vulnerable to bankruptcy: (1) those
AI-washing (inflating AI capabilities to attract investment); and
(2) businesses with operational dependencies on AI infrastructure,
but perhaps without full ownership or control. While many
responsible AI companies work tirelessly to advance technology,
with more entrants to the market, more AI-involved bankruptcies are
likely as new business models emerge in the era of advanced AI and
decentralized frameworks — the fourth Internet
evolution.
When capital markets tighten and performance expectations sharpen,
both company typesface heightened restructuring risk. For
bankruptcy practitioners, this convergence presentsnovel
challenges. How do you value training datasets with contractual
restrictions? Whathappens when a debtor's primary asset is
access to a third-party model governed by anti-assignment clauses?
Can a debtor-in-possession (DIP) monetize AI infrastructure built
onlicensing arrangements?
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