GPU Loan Default Playbook: Procedure Template for Lenders, Lessors and Investors

A GPU loan or lease runs into trouble in one of three ways: the equipment is damaged, the borrower defaults, or the offtaker stops paying.

These situations are recoverable, and don't always mean the project's end. But in the worst case, the servers must be sold.

We wrote down what to do in the first 72 hours of each, as a Word document to complete for each facility and keep in the credit file. It applies to lenders, lessors and investors in GPU-backed loans and leases; where it says lender, it means whoever holds the collateral or the credit risk. It covers:

• The documents to have signed at funding, with a column for the evidence: property, transit and equipment breakdown insurance, the colocation and collateral access agreements, remote hands, a Backup Operator, Lost Revenue Cover and residual value insurance.
• The steps for each situation, with who is responsible and by when.
• The worst case, selling the servers: Article 9 notice, drive sanitization, diagnostics, ITAD and other buyer channels, export screening, and the claim under residual value insurance if the sale comes in below the insured floor.
• A contact sheet and a 72-hour event log.

It is a template, not legal advice. The sources are below.

Can a lender repossess GPUs after the borrower files?

Not without the court. Once a borrower files for bankruptcy, the automatic stay stops repossession, lockouts and sales of the servers. ^{[1]11 U.S. Code Section 362: automatic stayhttps://www.law.cornell.edu/uscode/text/11/362} The lender gets the GPUs back by agreement with the debtor, a court order, a court-approved sale or a plan. ^{[2]American Compute, "What Happens to GPUs When a Neocloud Goes Bankrupt" (October 2026)/blog/what-happens-to-gpus-when-a-neocloud-goes-bankrupt}

Aircraft lenders get their planes back 60 days after an airline files unless it cures. ^{[3]11 U.S. Code Section 1110: aircraft equipment and vesselshttps://www.law.cornell.edu/uscode/text/11/1110} GPU lenders have no equivalent. Core Scientific's equipment lenders waited from about six weeks, for a negotiated return, to 13 months under the plan. ^{[4]The Block, "Core Scientific cuts deal with lender NYDIG to extinguish $38.6 million in debt" (February 2, 2023)https://www.theblock.co/post/208323/core-scientific-cuts-deal-with-lender-nydig-to-extinguish-38-6-million-in-debt [5]Core Scientific, Form S-1: plan of reorganization, miner equipment lender elections (April 2024)https://www.sec.gov/Archives/edgar/data/1839341/000162828024016122/core-20240413.htm}

We found no public record of a GPU-backed loan being foreclosed and its GPUs auctioned as of October 2026. The nearest comparison is the 2022-2023 bitcoin-mining defaults. Lenders who took the machines back, or a quick cash payoff, recovered 37-65% of their debt; lenders whose borrower kept operating recovered 80-100%. ^{[6]American Compute, "GPU Loan Default Recovery Casebook" (October 2026)/blog/gpu-loan-default-recovery-casebook}

If the equipment is damaged or breaks down

Which policy pays depends on the cause. The servers stop billing while the loan payments continue.

Remote hands, the technicians on site, do the physical work: a GPU swap takes 2-4 hours, and with spares on site the server is back in production in under a day. ^{[10]American Compute, "When a GPU Dies in Production" (2026)/blog/when-a-gpu-dies-in-production} The remote hands rate is set in the colocation order form. ^{[11]American Compute, "Colocation Contracts for GPU Clusters" (2026)/blog/colocation-contracts-for-gpu-clusters}

In the first 72 hours:

• Notice of loss goes to each insurer, with the serial of every damaged unit.
• Damaged units are kept for the adjuster, photographed and tagged.
• The lender confirms it is loss payee, so the claim pays down the loan.
• The net recovery is checked against the deductible: 2-5% of insured value for named windstorm and 10-15% for earthquake. ^{[7]American Compute, "GPU Cluster Insurance" (2026)/blog/gpu-cluster-insurance}

If the borrower or operator fails

A cluster earns only with power, a colocation contract and someone to run it. In Chapter 7, a trustee usually does not operate the cluster, and the GPUs come back without power or a customer. ^{[2]American Compute, "What Happens to GPUs When a Neocloud Goes Bankrupt" (October 2026)/blog/what-happens-to-gpus-when-a-neocloud-goes-bankrupt}

The colocation provider can seize the servers if the borrower misses payments. Some colocation contracts give the provider a UCC Article 9 security interest in all customer equipment, with the right to sell it within about three weeks of cutting power. ^{[11]American Compute, "Colocation Contracts for GPU Clusters" (2026)/blog/colocation-contracts-for-gpu-clusters} Get that right waived early, while the borrower is still negotiating the colocation contract: once it is signed, the provider has little reason to give it up. The lien waiver, also called a landlord waiver, goes in a collateral access agreement among the lender, the borrower and the provider, which also sends the lender notice of default within 2 days, lets the lender cure and keep the power on, and gives it time to remove the servers. ^{[12]Collateral access agreement among Beau Se Jour Company, The Old Evangeline Downs and Foothill Capital Corporation, SEC Exhibit 10.10 (2003)https://www.sec.gov/Archives/edgar/data/1235660/000119312503019307/dex1010.htm} The same agreement should give the lender or lessor step-in rights: to take over the colocation contract itself, or hand it to a named operator, without the borrower's fresh consent. ^{[13]American Compute, "Colocation Step-In Rights for GPU Lenders" (2026)/blog/colocation-step-in-rights-gpu-lenders}

A Backup Operator is named at funding and takes over running the cluster after a trigger, including instructing remote hands, so the offtaker keeps getting service. ^{[14]American Compute, "Backup Servicers and Backup Operators for GPU Loans" (2026)/blog/backup-servicer-gpu-loans} A 2017 Sunrun solar facility makes a handover longer than 30 days an event of default. ^{[15]Sunrun Hera Portfolio 2015-A, amended and restated credit agreement, Form 10-Q Exhibit 10.2 (filed August 2017)https://www.sec.gov/Archives/edgar/data/1469367/000162828017008210/sunrunex1022017q2.htm} Offtakers write the same right into their own contracts: if CoreWeave becomes insolvent, OpenAI can require it to assign the contract to a substitute operator within two business days. ^{[16]CoreWeave / OpenAI, Master Services Agreement, Bare Metal Environment, Section 10(c), SEC Exhibit 10.24 (2025)https://www.sec.gov/Archives/edgar/data/1769628/000119312525052207/d899798dex1024.htm}

In the first 72 hours:

• After a petition, no self-help: no remote shut-off, no sweep of the borrower's accounts, no cage lockout. ^{[1]11 U.S. Code Section 362: automatic stayhttps://www.law.cornell.edu/uscode/text/11/362}
• The lender cures the colocation invoice so the power stays on.
• The Backup Operator is triggered and its escrowed credentials are tested.
• GPU serials are reconciled to the UCC-1 and invoices.
• A petition-date appraisal is ordered. Adequate protection pays for a decline in value, not for the wait. ^{[17]11 U.S. Code Section 361: adequate protectionhttps://www.law.cornell.edu/uscode/text/11/361 [18]United Savings Association of Texas v. Timbers of Inwood Forest Associates, 484 U.S. 365 (1988)https://www.law.cornell.edu/supremecourt/text/484/365}

If the offtaker stops paying

Stability AI short-paid its July 2023 AWS bill by $1M, and in June 2024 its suppliers forgave about $100M. ^{[19]The Register, on Stability AI's unpaid cloud bills, citing Forbes (April 3, 2024)https://www.theregister.com/2024/04/03/stability_ai_bills/ [20]TechCrunch, "Stability AI lands a lifeline from Sean Parker, Greycroft," citing The Wall Street Journal (June 25, 2024)https://techcrunch.com/2024/06/25/stability-ai-lands-a-lifeline-from-sean-parker-greycroft} The cluster keeps running while nobody pays for it.

The written non-payment notice starts the cure period, typically 30-45 days. ^{[21]American Compute, "Compute Offtake Agreements" (2026)/blog/compute-offtake-agreements} Lost Revenue Cover pays the missed revenue for 30 days. ^{[22]American Compute, Lost Revenue Cover program brief (2026)/briefs/lost-revenue-cover.pdf} That is the time to collect or to sign a new offtaker, starting with the spot markets the borrower registered with at signing.

The new rate is usually lower. H100s rented above $8 an hour in 2023 and cleared at $1-2 on short-term auctions by August 2024. ^{[23]Eugene Cheah, "$2 H100s: How the GPU Rental Bubble Burst," Latent Space (October 11, 2024)https://latent.space/p/gpu-bubble} An offtaker that files can reject the contract, which leaves the borrower an unsecured claim for damages. ^{[24]11 U.S. Code Section 365: executory contracts and unexpired leaseshttps://www.law.cornell.edu/uscode/text/11/365}

If the servers have to be sold

Selling is the worst case: lenders that took machines back to sell in the mining bust recovered the least. ^{[6]American Compute, "GPU Loan Default Recovery Casebook" (October 2026)/blog/gpu-loan-default-recovery-casebook}

A lender sells repossessed servers under Article 9 of the Uniform Commercial Code. Every aspect of the sale must be commercially reasonable, and the borrower, guarantors and other secured parties get notice. In a commercial deal, notice sent 10 days or more before the sale is timely. ^{[25]Uniform Commercial Code Section 9-610: disposition of collateral after defaulthttps://www.law.cornell.edu/ucc/9/9-610 [26]Uniform Commercial Code Section 9-612: timeliness of notification before dispositionhttps://www.law.cornell.edu/ucc/9/9-612}

Before the sale, serials are matched to the UCC schedule, drives are purged under NIST SP 800-88 with a certificate per device (or pulled and destroyed), and NVIDIA's DCGM diagnostics run on every node: up to 2.25 hours for the longest level on an 8-GPU Hopper server. ^{[27]NIST Special Publication 800-88 Revision 2, "Guidelines for Media Sanitization" (September 2025)https://csrc.nist.gov/pubs/sp/800/88/r2/final [28]NVIDIA, DCGM diagnostics user guide: run levels and durationshttps://docs.nvidia.com/datacenter/dcgm/latest/user-guide/dcgm-diagnostics.html}

Whole tested clusters sell better than parted-out nodes. ^{[29]American Compute, "How to Sell Repossessed GPU Servers" (2026)/blog/how-to-sell-repossessed-gpu-servers} Data center GPUs are export-controlled, so buyers are screened against the Bureau of Industry and Security red flags: a new buyer, little online presence, an unclear destination, or a data center that cannot host the servers. ^{[30]Bureau of Industry and Security, "Industry Guidance to Prevent Diversion of Advanced Computing Integrated Circuits" (May 13, 2025)https://www.bis.gov/media/1576}

Residual value insurance puts an insured floor under what the equipment will be worth at the trigger dates set in the policy. If eligible equipment sells for less than the floor, the insurer pays the shortfall: GPUs insured at a 20% floor that sell for 5% leave a 15% claim. ^{[31]American Compute, Recovery Floor (20%+), Residual Value Insurance (2026)/solutions/residual-value-insurance} The sale has to follow the policy's disposal process, and the policy excludes unmaintained equipment and a skipped process. Physical damage stays with property insurance and defects with the OEM warranty. ^{[32]American Compute, Residual Value Insurance program brief (2026)/briefs/residual-value-insurance.pdf}

Deadlines after a default

Where these practices come from

Planning before a default

Two pieces of work make the first 72 hours shorter when they are done in advance.

An exposure map. From public records (UCC filings, SEC filings and court dockets), list every recorded lender, lessor and lien on the borrower, who buys its capacity, and the other GPU borrowers of each exposed lender. When one borrower defaults, the map shows who else is exposed and who is likely to be selling the same hardware.

A re-mark plan. Decide in advance how the collateral will be re-marked: distressed market value and through-cycle value per model, whole nodes against parted out, net of de-install and shipping, and the value of keeping the cluster running against selling it. The petition-date appraisal in the procedure starts from this.

References

1. 11 U.S. Code Section 362: automatic stay
2. American Compute, "What Happens to GPUs When a Neocloud Goes Bankrupt" (October 2026)
3. 11 U.S. Code Section 1110: aircraft equipment and vessels
4. The Block, "Core Scientific cuts deal with lender NYDIG to extinguish $38.6 million in debt" (February 2, 2023)
5. Core Scientific, Form S-1: plan of reorganization, miner equipment lender elections (April 2024)
6. American Compute, "GPU Loan Default Recovery Casebook" (October 2026)
7. American Compute, "GPU Cluster Insurance" (2026)
8. IRMI, insurance definitions: "equipment breakdown insurance"
9. American Compute, "Insuring Modular Data Centers" (2026)
10. American Compute, "When a GPU Dies in Production" (2026)
11. American Compute, "Colocation Contracts for GPU Clusters" (2026)
12. Collateral access agreement among Beau Se Jour Company, The Old Evangeline Downs and Foothill Capital Corporation, SEC Exhibit 10.10 (2003)
13. American Compute, "Colocation Step-In Rights for GPU Lenders" (2026)
14. American Compute, "Backup Servicers and Backup Operators for GPU Loans" (2026)
15. Sunrun Hera Portfolio 2015-A, amended and restated credit agreement, Form 10-Q Exhibit 10.2 (filed August 2017)
16. CoreWeave / OpenAI, Master Services Agreement, Bare Metal Environment, Section 10(c), SEC Exhibit 10.24 (2025)
17. 11 U.S. Code Section 361: adequate protection
18. United Savings Association of Texas v. Timbers of Inwood Forest Associates, 484 U.S. 365 (1988)
19. The Register, on Stability AI's unpaid cloud bills, citing Forbes (April 3, 2024)
20. TechCrunch, "Stability AI lands a lifeline from Sean Parker, Greycroft," citing The Wall Street Journal (June 25, 2024)
21. American Compute, "Compute Offtake Agreements" (2026)
22. American Compute, Lost Revenue Cover program brief (2026)
23. Eugene Cheah, "$2 H100s: How the GPU Rental Bubble Burst," Latent Space (October 11, 2024)
24. 11 U.S. Code Section 365: executory contracts and unexpired leases
25. Uniform Commercial Code Section 9-610: disposition of collateral after default
26. Uniform Commercial Code Section 9-612: timeliness of notification before disposition
27. NIST Special Publication 800-88 Revision 2, "Guidelines for Media Sanitization" (September 2025)
28. NVIDIA, DCGM diagnostics user guide: run levels and durations
29. American Compute, "How to Sell Repossessed GPU Servers" (2026)
30. Bureau of Industry and Security, "Industry Guidance to Prevent Diversion of Advanced Computing Integrated Circuits" (May 13, 2025)
31. American Compute, Recovery Floor (20%+), Residual Value Insurance (2026)
32. American Compute, Residual Value Insurance program brief (2026)
33. Greenidge Generation, Form 8-K Exhibit 99.1: debt restructuring with NYDIG (January 30, 2023)
34. KBRA, "KBRA Comments on TGI Fridays Chapter 11 Bankruptcy Filing" (November 4, 2024)
35. CMS, "Subrogated recoveries and a reminder of the Napier principles," on Royal & Sun Alliance Insurance v Textainer Group Holdings, Court of Appeal of England and Wales (2024)
36. U.S. Attorney's Office, Southern District of New York, charges against Tricolor executives (December 2025)