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When a GPU or data centre borrower fails.
What happens to the GPUs, the site and the customer contracts when a neocloud or data centre borrower defaults, in the order it happens. The US and English rules sit side by side, each quoted from the statute, with what the lender, the sponsor and the data centre owner each ask for in the documents to be ready for it.
The map
13 points in 5 stages
Each point links to the official text: the US Code, the Uniform Commercial Code, the Export Administration Regulations and legislation.gov.uk. Select a point for the quoted text and the playbook for each side.
1Taking the GPUs
| The point | In the US | In England |
|---|---|---|
| Taking possession of the GPUs In the US a secured lender can repossess, or switch the GPUs off where they sit, without a court; in England it acts through a receiver or an administrator. | Uniform Commercial Code § 9-609 | Law of Property Act 1925, s109(1) and (2); Insolvency Act 1986, s72A(1); English law desk: Hold a qualifying floating charge to choose the administrator |
| There is no section 1110 for GPUs Aircraft and ships get a special carve-out from the US bankruptcy stay; GPUs do not, so the stay applies in full. | 11 U.S.C. § 1110(a)(1), (2) and (3) | English law desk: Administration freezes enforcement against the GPUs |
2The data centre
| The point | In the US | In England |
|---|---|---|
| Is the colocation agreement a lease? If the neocloud's colocation agreement is a US real property lease it must be assumed or rejected within 120 days of a filing, with rent paid meanwhile; if it is a services contract there is no deadline. | 11 U.S.C. § 365(d)(3) and (4) | English law desk: A landlord can take the tenant's own goods for rent, not a colocation customer's |
| A data centre owner's claim for future rent is capped In a US bankruptcy the landlord's claim for rejected rent is capped at the greater of one year or 15% of the remaining term (up to three years). | 11 U.S.C. § 502(b)(6) | English law desk: A restructuring plan can bind a dissenting class of lenders |
3The customers
| The point | In the US | In England |
|---|---|---|
| Can customers walk away when the neocloud fails? In the US a customer cannot terminate a compute contract just because the provider filed; in England the statute protects only an insolvent customer, so the neocloud's customers can still rely on an insolvency termination clause. | 11 U.S.C. § 365(e)(1) | English law desk: Suppliers to an insolvent GPU cloud cannot terminate for insolvency |
| Compute revenue after a filing is the lender's cash collateral In the US the security reaches customer payments earned after the filing, and the debtor cannot spend them without the lender's consent or a court order. | 11 U.S.C. § 552(b)(1); 11 U.S.C. § 363(c)(2) | English law desk: A floating charge over GPUs gives way to unsecured creditors and the administrator |
4In bankruptcy or administration
| The point | In the US | In England |
|---|---|---|
| The filing stops enforcement A US Chapter 11 filing and an English administration both freeze enforcement against the GPUs immediately. | 11 U.S.C. § 362(a)(3) and (4) | English law desk: Administration freezes enforcement against the GPUs |
| Depreciation is the lender's best argument in court A US lender is entitled to protection against the fall in value of its collateral during the case; GPUs lose value fast, so this argument is strong. | 11 U.S.C. § 362(d)(1); 11 U.S.C. § 361 | Insolvency Act 1986, Sch B1, para 71(1) and (3) |
| The lender can bid its debt for the GPUs At a US bankruptcy sale a secured lender can credit bid its claim; in England a lender buys through a pre-pack or a receiver's sale. | 11 U.S.C. § 363(k) | Law of Property Act 1925, s101(1)(i) |
| GPUs in two countries: whose stay applies? An English administration recognised in the US brings the US stay with it; a US Chapter 11 recognised in Great Britain does not by itself stop a secured lender enforcing. | 11 U.S.C. § 1520(a)(1) | Cross-Border Insolvency Regulations 2006, Sch 1, arts 20 and 21 |
5Selling the GPUs
| The point | In the US | In England |
|---|---|---|
| Every aspect of the sale must be commercially reasonable A US lender selling GPUs must act in a commercially reasonable way and give at least 10 days' notice; an English receiver must take reasonable care to get the true market value. | Uniform Commercial Code § 9-610(b); Uniform Commercial Code § 9-611(b); Uniform Commercial Code § 9-612(b); Uniform Commercial Code § 9-627(b) | Law of Property Act 1925, s101(1)(i) |
| A foreclosure sale is still an export control transfer US-origin AI chips stay subject to US export controls wherever they are; selling them to a new owner abroad can need a licence, foreclosure or not. | 15 C.F.R. § 734.3(a)(2); 15 C.F.R. § 734.16; 15 C.F.R. § 742.6(a)(6) | Retained Regulation (EC) No 428/2009, art 3(1) |
| Wipe the drives before the servers are sold Seized servers carry customer data on their drives; sanitise them to a recognised standard before sale, and keep the record. | NIST SP 800-88 Rev. 2, Guidelines for Media Sanitization | UK GDPR, art 32(2) |
Method
The law as at 28 October 2026. US federal law is quoted from the US Code on govinfo.gov and the eCFR; the Uniform Commercial Code from its official text, which New York has enacted for these sections; English law from legislation.gov.uk. Every quoted passage was checked against that text. State law, court practice and the documents in each deal will change the answer. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
