Emory Law Journal


Cameron Love


In 2000, an online toy retailer, Toysmart.com, attempted to liquidate consumer data to pay creditors in its bankruptcy case. The attempted sale drew objections from the Federal Trade Commission and forty-seven state attorneys general. Five years later, Congress attempted to resolve privacy concerns in bankruptcy, amending the Bankruptcy Code to provide clear procedures for the liquidation of “personally identifiable information.” Recently, scholars have criticized these amendments, characterizing them as “limited,” “outdated,” and “privacy theater.” This Comment adds to these criticisms, arguing the amendments’ failure to mandate consideration of relevant nonbankruptcy law puts these permissive sales procedures on a collision course with state data privacy laws. These new state data laws will complicate and disrupt the liquidation of personally identifiable information during bankruptcy by decreasing asset values and threatening costly litigation from improper data practices. If Congress or bankruptcy courts do not act quickly to ensure these state privacy laws are properly effectuated during bankruptcy, another case like Toysmart.com will expose the inadequacy of the Bankruptcy Code’s privacy framework.

This Comment offers a critical assessment of the current Bankruptcy Code procedures for the sale of personally identifiable information. It begins with a discussion of the process required under the Bankruptcy Code for sales of personally identifiable information, focusing on the deficiencies in the data sales provision and the privacy practices of bankruptcy courts. Following discussion of the current Bankruptcy Code framework, this Comment outlines the most important aspects and enforcement of new state data laws. Next, this Comment anticipates and explains the likely future conflicts between current bankruptcy procedures and new state data laws. Lastly, this Comment proposes solutions for Congress and bankruptcy courts to ensure the efficiency and efficacy of corporate bankruptcy while preserving the privacy rights of consumers.