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So we are in the process of cleaning up old orphaned users who are getting sent email alerts. Is there any downside to removing these orphaned users from a site?
What happens to any files checked out/created by that user? Are there any issues when migrating to different versions of SharePoint?
Checked out files will remain checked out to that user. Created By/Modified By will remain until you migrate that content via a content migration tool, such as Sharegate. Otherwise if you perform database attach upgrades, the data will remain consistent.
