HouseCanary’s Chapter 11 and the AI Valuation Vendor Question

On September 22, 2026, HouseCanary and its affiliates filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the District of New Jersey, before Judge Eamonn James O’Hagan in Trenton, with joint administration requested under the lead case, House Canary New Jersey, Inc., No. 26-20766. The court docket shows the parent, HouseCanary, Inc., as case No. 26-20769, and a status conference set for November 12 at 2:00 p.m. The first-day declaration of chief executive Chris Rediger, filed September 23, describes the company in its own words: founded in 2013, headquartered in San Francisco but fully remote, 37 employees beyond its four executives, and an AI-powered valuation, analytics and data platform covering more than 136 million U.S. residential properties. Its customers, the declaration says, include financial institutions, government-sponsored enterprises, mortgage lenders, investment banks, whole loan buyers, single-family rental REIT operators and real estate agents. It also reports a 2.7% median error rate for its automated valuations on listed homes, which is a company claim, not a PSV finding. The records disagree on how many debtors there are: the declaration and the financing order each list six, including ComeHome, Inc., while the claims agent’s case site lists five.

The declaration says the filing was made to stop a sale. HouseCanary borrowed under a loan and security agreement dated around March 25, 2021, with Ocean II PLO LLC as agent, a facility of up to $30 million secured by substantially all of its tangible assets and contracts. The loan was amended six times, matured January 31, 2026, and was not repaid. On September 8, Ocean II noticed a public auction of the collateral for 1:00 p.m. on September 22 in Menlo Park, California. HouseCanary sued in San Mateo County Superior Court on September 17 to stop it, and the court denied a temporary restraining order on September 21. The company filed Chapter 11 the next day. On September 25 the court entered an interim order approving a debtor-in-possession facility of up to $15 million from Condor FundingCo 26, LLC: $3 million now, of which $1 million is funded on entry and $2 million depends on a plan term sheet acceptable to the lender in its sole discretion, and $12 million more if a final order is entered after a hearing on October 20. HouseCanary’s September 24 release says customer operations, products, data services and support continue without interruption, and that it currently expects allowed creditor claims to be paid in full. Both are company statements, subject, as the release itself says, to the Chapter 11 process and court approval.

The operator question is not whether HouseCanary survives. It is what a valuation feed is actually worth to a customer when its maker is in court. The declaration describes an unusual split in who holds what. Ocean II’s lenders hold the operating collateral, meaning contracts, accounts and equipment, but the 2021 loan excluded HouseCanary’s intellectual property and its Texas litigation. A litigation funder, Crane 2 FundingCo 23, LLC, holds a security interest in the Texas claims, their proceeds and the intellectual property related to that litigation. The new financing adds first-priority liens on certain of the company’s intellectual property that was unencumbered. So the model that produces the valuations and the contracts that deliver them to customers sit under different creditors, and a sale or plan in this case will have to put them back together. The declaration says Ocean II’s auction would have dispersed customer contracts and workforce with no practical way to reassemble the business.

The other large asset is a lawsuit about the model itself. On March 6, 2026, a Bexar County, Texas jury found that Amrock, now Rocket Close, misappropriated HouseCanary’s trade secrets and defrauded it, and awarded about $175 million in compensatory damages, according to the declaration and HouseCanary’s trial counsel, Susman Godfrey. It was the second trial: a 2018 judgment of about $739.7 million was reversed on appeal in 2020 and sent back. The declaration says interest could lift the award above $260 million and that Amrock has said it will appeal, so the money is neither collected nor final. Set beside the financing, the gap is plain: the interim loan is $3 million and the full facility is $15 million, against a verdict of about $175 million that the company must stay alive to defend. The declaration also says Ocean II at one point demanded a $20 million amendment fee, described as about half of the existing obligation, which computes to roughly $40 million owed, above the facility’s stated $30 million ceiling; the declaration does not reconcile the two.

The artifact is a vendor continuity register, one row per valuation, data or AI vendor whose output feeds an underwriting model, a lender report or an investor mark. Inputs: the master agreement and order forms; any source code or data escrow agreement; the vendor’s security and audit reports; a UCC lien search on the vendor, which is public and would have shown Ocean II’s position; public court dockets; and the firm’s own list of models, reports and loans that consume the feed. Output, per vendor: whether the contract is a license of intellectual property or a service subscription; the customer’s rights to export or keep data already delivered; termination and transition assistance terms; any escrow release trigger; who holds liens on the vendor’s IP; and a named second source with a tested switch. Every row cites the clause or filing behind it.

The reviewer is the firm’s counsel with the head of underwriting or valuation, and the gate is that no model inherits a new feed, and no vendor is dropped, until both have signed. Counsel matters because bankruptcy changes contract rules: Section 365(n) of the Bankruptcy Code lets a licensee of intellectual property, a term the Code defines to include trade secrets and copyrighted software, keep using it if the debtor rejects the license, but a subscription to a hosted service may not be a license of intellectual property at all, and only the contract text answers that. An assistant does the volume work well: extracting the same terms across every vendor agreement, running the lien and docket checks on a schedule, and flagging which reports depend on which feed. It should not interpret whether a contract survives rejection or decide which vendor to trust. PSV ran no model on HouseCanary’s data, tested no product and promises no outcome.