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27 Am. Bankr. Inst. L. Rev. 1 (2019)

handle is hein.journals/abilr27 and id is 1 raw text is: 












         THE   SALE   OF  PERSONALLY IDENTIFIABLE INFORMATION IN
                                      BANKRUPTCY

                          MICHAEL ST. PATRICK BAXTER*

                                TABLE   OF CONTENTS

Introduction..................                 .....................        ............. 1
I.    PII Amendments to the   Bankruptcy   Code......................... 3
II.   The Toysmart   Template  .........                             ....................... 7
III.  Prior Privacy Policies.........................8...                 ..........8
Conclusion                .................................................. 15

                                   INTRODUCTION

    In a digital economy,   information  can be  more  valuable than  tangible assets.'
One  of a business  debtor's more  valuable  assets is the personal information it has
collected  from  its customers.2   This  information  may   include  names,   physical
addresses,  e-mail   addresses,  telephone  numbers, purchase histories, personal
preferences,  and  many   other types  of information.   Personal  information   about
consumers   is highly valued, as businesses and  marketers  increasingly seek ways  to
target consumers  with specific demographics   and interests.3
    When a debtor wishes to sell the personal information it has collected from
consumers,   a tension  is created between   the debtor's interest in maximizing   the
value  of its assets and the consumers'  interest in privacy.4 If the debtor's privacy
policy  prohibits the sale of its customers'  personal information  or  if the privacy
policy fails to disclose that the debtor may sell or transfer such information to third


   Copyright C 2018 by Michael St. Patrick Baxter. Partner, Covington & Burling LLP; Professorial
Lecturer in Law, The George Washington University Law School; Conferee, National Bankruptcy
Conference; Fellow, American College of Bankruptcy; Founding Member, International Insolvency
Institute; and Member, The American Law Institute. The author was the consumer privacy ombudsman in
the Borders and BPS Holdings bankruptcy cases. I am grateful for the valuable comments on an earlier draft
of this article from Rachel A. Greenleaf, David J. Bender, Julia C. Duke, and Joan S. Baxter. The views
expressed are solely those of the author.
   See Kayla Siam, Coming to a Retailer Near You: Consumer Privacy Protection in Retail Bankruptcies,
33 EMORY  BANKR. DEV. J. 487, 491 (2017) (While tangible assets tend to deflate in value over time,
intangible assets, such as consumer information, tend to increase in value . . . .).
  2 See Walter W. Miller, Jr. & Maureen A. O'Rourke, Bankruptcy Law v. Privacy Rights: Which Holds the
Trump Card?, 38 HOUS. L. REV. 777, 779, 783, 788 (2001) (describing the type of information a business
may  extract from a given customer's actions and how that information can help a business target its
advertising).
  3 See Siam, supra note 1, at 502-03 ([C]ompanies use personal information to efficiently market products
and services to consumers . . . .).
   See Daniel Brian Tan, Maximizing the Value ofPrivacy Through Judicial Discretion, 34 EMORY BANKR.
DEV. J. 681, 681 (2018) (explaining the increased risk of breaching consumer confidentiality when a
business collects PII).


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