back to article Bankrupt school ITT pleads 'don't let Microsoft wipe our cloud data!'

The estate of bankrupt US trade school ITT Technical Institutes is today asking a court to stop Microsoft from erasing its cloud data. In a filing [PDF] to the US District Bankruptcy Court of Southern Indiana, the caretakers of the defunct for-profit university seek an order to bar the Redmond giant from wiping the contents of …

  1. thames

    Don't forget the fees.

    The bankruptcy lawyers will probably bill the estate more in fees on this motion than the cost of the outstanding bill.

    They've had since September to worry about this. According to the document, they didn't even look into preserving the data until last month, which is long after the expiration countdown had begun.

    The concern of the lawyers by the way isn't for the students. They'll get screwed regardless. It's that there may be data somewhere in there which the lawyers can trawl through which will help them in pursuing the bankruptcy proceedings.

    The situation is however instructive from the point of view of companies offering cloud services. They should all have some expeditious means by which they can dump out some disks or tapes with the client's data and hand them over to the trustee as quickly as possible so they can wash their hands of the whole affair instead of getting dragged repeatedly into very expensive legal proceedings.

    It's something to think about.

    1. LDS Silver badge

      Re: Don't forget the fees.

      There could be also assets that can be of some value to creditors in a bankruptcy proceedings- maybe not in this case, but it could happen, i.e. products blueprints, digital media, code, etc.

      If everything is in the cloud, there is no local backup, and simply gets deleted, this value could be destroyed damaging creditors.

    2. keithpeter
      Windows

      Re: Don't forget the fees.

      Preservation fee is roughly 12x the outstanding rental payment. Is 2.5 x 10^6 dollars reasonable for a data dump? If so, should cloud agreements not have a 'data escrow' clause?

      Disclaimer: clueless end user just wondering...

      1. Doctor Syntax Silver badge

        Re: Don't forget the fees.

        "If so, should cloud agreements not have a 'data escrow' clause?"

        From the customer's PoV, yes. But it would be up to them to insist on it when the contract's set up. It's too late to start thinking about that when things go wrong. Despite everything that's said about lawyers this is why you need them - to see such problems in advance.

        1. Orv

          Re: Don't forget the fees.

          Yup. If you're an entity the size of ITT you absolutely can negotiate things like this with Microsoft. I've seen it happen. But you do have to do it BEFORE you finalize the contract.

    3. naive

      Re: Don't forget the fees.

      Funny world, except from having to learn Indian English in order to halfway understand the MS Azure support engineers, the payment to Redmond replaces the backup tape.

      But it must be better since it costs less.

  2. Chairo

    Estimations

    ITT estimates it owes $177,466.46 on an agreement that runs until May 31.

    Quite a rough estimation, it seems.

    It reminds me of the presentation our VP gave regarding the efficiency gains of "lean" introduction.

    18.42%. I wanted to ask if it is not rather 18.41 or 18.43, but kept my mouth shut. I had the feeling I was not alone.

    1. Doctor Syntax Silver badge

      Re: Estimations

      "It reminds me of the presentation our VP gave regarding the efficiency gains of "lean" introduction."

      That in turn reminds me of the estimated savings to be gained by relocating a company. Various subheadings were given along with the overall figure. The overall figure was £1m out from the sum of the subheadings. Rounding errors!

      1. Wensleydale Cheese

        Re: Estimations

        "The overall figure was £1m out from the sum of the subheadings. Rounding errors!"

        One of the golden rules of doing presentations is to keep away from arithmetic, as someone in the audience will check it, and holler if it's wrong.

        If you really have to include arithmetic, get someone else to check it before the presentation.

      2. allthecoolshortnamesweretaken

        Re: Estimations

        In the wrong hands, Excel is a weapon of math destruction.

    2. LDS Silver badge

      "18.42%. I wanted to ask if it is not rather 18.41 or 18.43"

      It's just the default decimal places in Excel for "percentage" cell formatting.

  3. Anonymous Coward
    Anonymous Coward

    Once you send your data to the cloud

    you can kiss it goodbye. OK, raise your hand all those who didn't see it coming! Now those of you who did, go look in the mirror.

    1. BillG

      Re: Once you send your data to the cloud

      you can kiss it goodbye. OK, raise your hand all those who didn't see it coming! Now those of you who did, go look in the mirror.

      Saw it coming. And this is going to be an important court case. Who owns the data, the cloud service provider or the content creator? Who's property is the data?

      1. kain preacher

        Re: Once you send your data to the cloud

        I see this as like renting an apartment. After so many days of moving out and not paying rent, how long are suppose to hold on to the former tents property. They were renting space on a cloud based system and stopped paying.

        1. Anonymous Coward
          Anonymous Coward

          Re: Once you send your data to the cloud

          Last year I rented a shop. The renter stopped paying after a few months. I could nor throw him out until a judge gave police the authorization to remove him, nor I could remove and sell what he left in the shop until a judge authorized me to do so (I'm not in the US, thus I don't know how it works there). Should MS here be allowed to do what I couldn't without a judge order?

          1. kain preacher

            Re: Once you send your data to the cloud

            In the US if a renter abandons the place. Typically after 30 days with written letters or 90 days you can chuck it. Some places once you a court eviction you can toss the stuff the same day with out a judges. Some places make you wait up to 30 days. If you abandon the property and stop paying for 8 months no court is required to dispose the stuff in the US. it will be looked at as abandon property. in fact you could sue for the clean up cost. So to answer your question yes by US law MS should be allowed to delete the data. Since this is in the US.

        2. Voland's right hand Silver badge

          Re: Once you send your data to the cloud

          I see this as like renting an apartment. After so many days of moving out and not paying rent, how long are suppose to hold on to the former tents property. They were renting space on a cloud based system and stopped paying.

          That is a flawed analogy. A landlord is not allowed by law to pile up the belongings of the tenant being evicted in the condo parking lot and set them on fire. It is obliged to store them for a reasonable period of time and ONLY if the bills are not unpaid auction them.

          IMHO, MSFT should do exactly that - hold off for X days and then auction the data and the "family and other bollocks act" be damned.

          1. kain preacher

            Re: Once you send your data to the cloud

            Nope depending on the state it could be as little as 30 days or 90 days and the stuff is considered abandon . Once that thresh hold is met the land lord can do what ever he or she wants. Toss it, sell it, burn it in an open pit. California is one of the few states that you have to hold stuff after an eviction(14 days) but we are talking about some he walked away for over 8 months. There is no requirement to store abandon property.

            1. Orv

              Re: Once you send your data to the cloud

              I once knew someone whose landlord locked them out for unpaid rent, then held their *cat* hostage as abandoned property to get them to pay up.

        3. keithpeter
          Windows

          Re: Once you send your data to the cloud

          "I see this as like renting an apartment."

          Eviction for non-payment of rent does not mean the landlord owns the possessions of the tenant, at least in the UK.

          https://england.shelter.org.uk/housing_advice/eviction/what_happens_when_bailiffs_evict_tenants

          So I guess your analogy fails to fit exactly at the crucial point of what happens to the data. I guess you can't put it in plastic bags and leave it on the step.

        4. Reue

          Re: Once you send your data to the cloud

          Until you get a court approved eviction order, and even then you are responsible for storing the property and then billing the former tenant for costs.

          Not paying rent does not stop a tenancy in the UK.

        5. Number6

          Re: Once you send your data to the cloud

          I see this as like renting an apartment. After so many days of moving out and not paying rent, how long are suppose to hold on to the former tents property. They were renting space on a cloud based system and stopped paying.

          The other parallel is renting an off-site storage unit - they usually have in their Ts and Cs what happens if you fall into arrears and at what point they're allowed to auction off the contents of your unit to recover their costs. Now there's an interesting precedent, M$ to auction off the data to the highest bidder. That would really make a lot of CIOs sit up and take notice.

      2. Adam 1

        Re: Once you send your data to the cloud

        It is not Microsoft's data, but neither is Microsoft under any obligation to store it. If they still want that service, the administrator can approve payment of the invoice.

      3. Mage Silver badge
        Headmaster

        Re: Once you send your data to the cloud

        Only use the Cloud for copies of public facing information, or transactions later stored on your own system.

        It made sense in 1960s and 1970s for smaller operations to outsource computer use to hosting. It makes no sense now to outsource core business data to the Cloud. It's not magical, just less secure hosting than 1970s over a less secure connection.

    2. Steve Davies 3 Silver badge

      Re: Once you send your data to the cloud

      Could not have said it better myself.

      One part of me wants MS to wipe the data. Then it will set a precident that I hope makes ALL CIO or whoever is responsible for the decisions to go to an external cloud provider think long and hard about that decisions.

      Here today, gone tomorrow. That is what clouds do in real life. IT Clouds are really no different.

      The other part wants MS to be forced to keep the data and the access to it until the Chapter 11/7 is resolved.

    3. Infernoz Bronze badge

      Re: Once you send your data to the cloud

      This is yet another example why keeping business data on the cloud and not owning business software is nuts.

  4. Griffo

    So.. by my counting they are 8 months delinquent, when for most companies 3 months would result in loss of data. In other words MS has already granted them quite a large extension, and instead of using that time to retrieve and backup the data, they have instead lobbed a TRO at them. Gotta love administrators.

    1. Dan 55 Silver badge

      They could have bought a few hard drives with the money they've spent on lawyers.

  5. Light Bulb Descendant
    Childcatcher

    Storage Wars

    In the world of storing tangible objects, when the lease of the storage container expires, the contents are auctioned off. Reference - see terribly (good/bad?) TV shows such as "Storage Wars".

    So why is data that different? Auction it off; I can't wait to bid for some emails about cancelled lectures!

  6. a_yank_lurker Silver badge

    Bankruptcy Creditors

    There are 2 basic types of creditors in a US bankruptcy: secured and unsecured. The secured have a lien against some asset such as real estate or equipment that they will likely own. They tend to recover a higher percentage of the debt. Unsecured get paid with what is leftover after all the secured creditors have been dealt with. Slurp is probably one of the unsecured creditors. Also, the court can force a creditor to maintain an asset until the case is resolved; the trustee has to ask the court to do this as it is not necessarily automatic.

  7. James Anderson Silver badge

    Price googing?

    $2.5 million to "preserve" the data, when $50 gets you a 2TB hard drive down at Walmart.

    These cloudy stuff begins to look pretty expensive.

    1. Anonymous Coward
      Anonymous Coward

      Re: Price googing?

      Good luck getting a enterprise grade disk for that much.

      Also you have no idea how much data there is...

      That said, does seem very steep.

      1. Doctor Syntax Silver badge

        Re: Price googing?

        "That said, does seem very steep."

        What can be paid out to the creditors as a whole will be a fixed amount and paid out as a percentage of the total debt. If MS put in a steep bill they raise their percentage of the total debt and thus their share of the payout.

    2. Kane Silver badge

      Re: Price googing?

      "These cloudy stuff begins to look pretty expensive lucrative."

      There, FTFY. You're welcome.

    3. Richard 26

      Re: Price googing?

      Going through the filing a bit: they have 40 000 students, and what Microsoft are saying is effectively "feel free to renew for another year". That works out at about $60 p.a. each, which is about what an Office 365 subscription costs. You would have thought they would have got a better discount but OTOH there are other unspecified items.

      1. 2Nick3

        Re: Price googing?

        "You would have thought they would have got a better discount but OTOH there are other unspecified items."

        Well, there is no incentive at all for MS to provide a discount at this point. There is zero chance of a renewal. They aren't going to collect on the bill, which means they will end up writing it off, so maximizing the value makes sense. And if they somehow do collect on it, so much the better.

        1. The Blacksmith
          Holmes

          Re: Price googing?

          Even better, if they know they are not going to be paid, but will probably have to hold it (it's before the courts type arrangement), you put the highest possible price on it. That allows you to write off that bad debt later against tax and thus reduce the tax bill payable.

          Bonus time!

    4. Proud Father
      Facepalm

      Re: Price googing?

      WTF?

      $2.5 Million to NOT delete some data? Really?

      Can I have some what they are smoking please?

    5. jswitte3416

      Re: Price googing?

      > $2.5 million to "preserve" the data, when $50 gets you a 2TB hard drive down at Walmart.

      Exactly what I was thinking. How much bloody data are we talking about? Petabytes? (I'm American, so I have no visceral idea of how strong an insult "bloody" is - other than it's use in the Harry Potter films in which it seems to be G-rated. Sorry if otherwise.)

      1. Roland6 Silver badge

        Re: Price googing?

        Re: I'm American, so I have no visceral idea of how strong an insult "bloody" is

        In this context it's not a straight-forward insult but more of an exasperated "stop beating about the bush and get to the point", thus convey's a degree of angry frustration with the party who is withholding relevant information- which in this case I would consider appropriate.

        I expect the GB-English experts among us to correct any mistake in my understanding.

        Re: when $50 gets you a 2TB hard drive down at Walmart. ...

        Exactly what I was thinking.

        Funnily, my thoughts were, who was paying for the internet connection with sufficient bandwidth to effect a complete (and suitably structured) download in a reasonable length of time...

  8. Stoneshop Silver badge
    Facepalm

    Once again

    "The Cloud" is shown to be someone else's computers. Also, they didn't do their backups to on-premises systems, if at all.

    Clearly, they were betting on the wrong horse.

  9. JimmyPage

    If MS are "required" to hold the data

    then will the expense come from:

    a) their profits ?

    b) raising prices for other customers who *haven't* gone under ?

    (a) is uncapitalist, and (b) socialist (may as well be communist to some USAians).

    decisions, decisions.

  10. Doctor Syntax Silver badge

    Dump it onto tape* encrypted. Hand the tapes to the administrators. When the bill is settled the administrators get the key.

    *Other media options are available.

    1. LDS Silver badge

      Other media options are available.

      WannaCrypt? Because what you're suggesting is probably illegal and akin to a ransomware.

      MS could probably dump the data give them to the bankruptcy administrators, and send them a bill for the service.

      1. Doctor Syntax Silver badge

        Re: Other media options are available.

        "Because what you're suggesting is probably illegal and akin to a ransomware."

        No. Basically it does what a landlord is entitled to do in the circumstances - distrain the debtor's property, in this case the data - but in a way that makes the administrators responsible for the storage avoiding accruing further debts. The payment being sought is what MS claim to be entitled to anyway, clearly different from a ransom for which there is no legal basis. If a court decides that the debt wasn't valid then the key can be handed over.

        1. Anonymous Coward
          Anonymous Coward

          Re: Other media options are available.

          Surely if the administrators moved in eight months ago and had the ability to retrieve this data, and they chose not to do so, this cost should be hitting them? Or at least the difference in cost between what it would have cost Day One of administrator control, plus a reasonable window of maybe one month, to what it costs now?

      2. Peter2 Silver badge

        Re: Other media options are available.

        Dumping the data to sets of PST's and directories and throwing it on some form of removable storage would be the most sensible way of going about it frankly.

        But doing that and encrypting it and saying that you'll hand over the encryption key when paid would be illegal under what law? It's certainly far more moral than simply deleting all of the data in question for non payment.

        Obviously any IT professional would have pulled the data from the cloud if it was known that the bill wasn't going to be paid, but I guess they didn't have one on staff. I guess we'll see a lot more of this sort of thing...

        1. stephanh

          Re: Other media options are available.

          I'd recommend sending the data on punch cards in a slightly soggy sea container.

          (Basically it seems to me ITT just wants to have the current service continued without paying, and is not making any efforts to store its data more cheaply.)

          1. usbac

            Re: Other media options are available.

            @stephanh

            This reminds me of something that happened years ago (late 80's I think, I was about 14 at the time). My mother worked for an organization that was an offshoot of our county government. They were starting a large project to build a geographic information system (GIS) of all of the land parcels in the county. The project was quite a thing in the 80's, as they needed to purchase a mainframe, and some very high-end graphic workstations.

            They contacted the government of the largest city in the county $BigCity and offered to share the database if they would contribute money or manpower to the project. They declined, not very politely.

            About two years go by, and after finding their own funding, the project was finished. Along comes lawyers for $BigCity using a law that since tax payers money was used to create the database, they claimed they were entitled to a copy of the database. Lots of legal wrangling ensued, and it ended up with the lawyers for my mom's organization saying that in fact they did need to give them a copy of the database.

            About that time, mom's boss and his wife were over for dinner, and they are complaining about losing the issue. Me, being kind of a smart-ass teenage geek, I suggest they hex dump the database on many boxes of green bar paper, using the worst old printer ribbon they could find. This would meet the legal requirement that they give them the database, I argued?

            It turns out that is what they did! Mom's boss invited me over to watch box after box print. We all stood around laughing our asses off as it printed. They even grabbed an old ribbon out of the trash. I was there when John called the city to tell them their copy of the database was ready, just come and pick it up...

        2. Korev Silver badge
          Childcatcher

          Re: Other media options are available.

          Dumping the data to sets of PST's and directories and throwing it on some form of removable storage would be the most sensible way of going about it frankly.

          Azure want somewhere between $0.05 to $0.087/GB for data download from the US zones. It's not clear if they'd actually be able to cough up the money for that.

        3. Number6

          Re: Other media options are available.

          Obviously any IT professional would have pulled the data from the cloud if it was known that the bill wasn't going to be paid, but I guess they didn't have one on staff. I guess we'll see a lot more of this sort of thing...

          This is probably because the IT professional, if there ever was one, got fired quite early on and if they followed common US practice and escorted him off the premises, he wouldn't have had a chance to either initiate a backup or tell someone else to do it even if he'd been inclined to be helpful..

  11. kmac499

    Did this "University" offer a comp-sci course I wonder??

    1. kain preacher

      Yes. it's a mill for MSCE and CNA.

    2. Anonymous Coward
      Anonymous Coward

      "Did this "University" offer a comp-sci course I wonder??"

      "University" is dead on. It was the comp-sci equivalent of a puppy mill, albeit with even less morals. Subject matter was horribly out of date.

      My sister got taken in by these shysters. Couldn't convince her otherwise, not even when I saw one of her textbooks and went full ROFL due to the incredible obsolescence of the text contained therein. With that said, in spite of me saying she wouldn't be able to get a job with the crap skills they taught her, she has consistently proved me wrong, albeit making HALF or less of what a normal degreed Engineer would be making though, and a 1/3 of what my non-degreed Software Engineering self makes without having paid a butt-ton of cash to hucksters/con-men such as these. Whatever they did offer appears to worth less than relatively inexpensive OTJ and homelab training. :) I've recommended taking ITT off her resume entirely and see if her salary goes up, but she's still proud of it for some reason...

  12. Anonymous Coward Silver badge

    IANAL

    prohibiting the Defendants from taking any actions that could result in the destruction, deletion, overwriting, or erasing of any of the Electronic Data or taking any other action or inaction that could affect the preservation of the Electronic Data

    OK, so stick the data on a disk (encrypted) and stick it in a safe. When the lawyers start asking for the data, you can then point out that there is a cost associated with data delivery... that'll be an invoice for $2.5m "data extraction, butterfly training* and hard disk purchase, with associated labour"

    * https://xkcd.com/378/

  13. Anonymous South African Coward Silver badge

    School owns the data, therefore the onus is on them to retrieve their data and store it somewhere else

    Microsoft can reclaim the storage space as it is their property and not the school's property.

    So who will pay M$ for the storage space in use by the school's data?

  14. Doctor Syntax Silver badge

    Reading through the pleading two things emerge.

    The administrators don't have a copy of the agreement and are complaining that MS won't let them see their copy. Apart from MS's admitting that there was an agreement it seems difficult for them to prove that there's an account at all!

    The administrators are wanting to have their cake and eat it. They want the data to be handed over but they don't know how to use it if it were handed over so they don't want the data to be handed over until it's convenient for them.

    1. Anonymous Coward
      Anonymous Coward

      If "they don't want the data to be handed over until it's convenient for them.", then it's obviously their cost?

      1. Doctor Syntax Silver badge

        "then it's obviously their cost?"

        Except they don't want it to be.

  15. Jason Bloomberg Silver badge

    The law

    What does the law say about physical goods which are held in storage in such cases?

    I have no idea but I am sure there must be established case law on that and I would expect it to be held the same for digital and virtual property as it is for physical.

    It is reasonable to allow some time to pay, time to allow problems, disputes and bankruptcies to be settled, but I cannot believe there will be any indefinite obligation for anyone to store someone else's property if they are not paying for it to be stored.

    And it is not like they haven't had plenty of time in which to retrieve their property.

    1. kain preacher

      Re: The law

      Jason Bloomberg

      IF you are talking about a storage place the law is they auction your stuff off or dispose of what they can not sell. Some times they sell it piece meal some times they sell the whole storage locker and the buyer is buying a pig in the poke as the can only see the stuff at the front of the locker. Either way they are not getting their stuff back if it was physical goods. Physical goods would of been disposed of much sooner than 8 months.

      1. Orv

        Re: The law

        Although my understanding is it's actually not that unusual for courts to issue injunctions preventing valuable property from being sold, because that property now belongs to the company's creditors.

    2. hoola Silver badge

      Re: The law

      Of course you forget the (very minor) detail, in order to get the data backup you have to pay all the egress charges when you have no money. Then there is the time etc. Depending on how much data there is it could take months to get it back. Microsoft are not supposed to be able to access it so the onus has to be on the owner. This is yet another case where the law has not actually caught up with all the cloudy stuff.

      How about the case where Apple refused to reset a password even though the Executors had everything legally required to execute the will?

      Unfortunately big business is unaccountable to nobody, yes the occasional shareholder but they are essentially free to do whatever they want, when they want and how they want. If you get caught, just cough up the fine or pay the appropriate fees (bribes) to the politicians.

  16. Anonymous C0ward
    Coat

    And Microsoft's response should be

    along the lines of "Fuck you, pay me". Yes, it's Microsoft, but when the same thing happens with invoices owed to small companies or individuals it really hurts.

  17. Alan(UK)

    Who owns the data?

    Looking at it another way - does Microsoft have any right to keep the data after they have stopped providing the customer access to it. Just because the customer placed the data in the cloud, it does not make them the owner of it. I could well imagine a situation where the actual creator of the data, who perhaps has their own personal back-up, would rather like the cloud copy destroyed now that circumstances have changed - for instance some of it might have commercial value but the cloud copy lacks any copyright attribution. There could be all sorts of stuff that might prove embarrassing for different people if it were to appear on Wiki-leaks.

  18. Anonymous Coward
    Anonymous Coward

    Everyone is looking at this the wrong way.

    1. Edu even ITT get MS services at a cheep rate. student accounts cost 0 faculty accounts with out office license cost 0. The price they are quoting is the costs to rebuild all of the Microsoft services and get them working. The costs also rocketed if they quoted rebuilding the Microsoft services on an Azure in a Box hardware. that hardware aint cheep.

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