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Home > Privacy and Business > Privacy Law Governing the Private Sector > Contracts > Privacy Contracts in Bankruptcy


Privacy Contracts and Bankruptcy

Increasingly in the Information Age, customer data is being regarded as an important asset of companies that have gone into bankruptcy. This has raised concerns that bankrupt companies will sell their data to companies that will not honor the contract under which the data was collected.

One role of the bankruptcy process is to maximize the amount of money that creditors receive from a bankrupt company, but the data held by a company should be sold only subject to the conditions under which is was collected. If a company has made a commitment that it will never sell data that it collects, that data can not be sold as an asset in bankruptcy.

If, on the other hand, a bankrupt company has not promised not to sell data, and if it does so subjecting purchasers to the same terms that the bankrupt company promised, this should create few problems. It does not violate the privacy expectations of the person who shared the information with the original company.


Links:

Sale of Data Raises Privacy Worries by Susan Stellin, New York Times (December 4, 2000)

Comments? comments@privacilla.org (Subject: InBankruptcy)

[updated 02/19/01]



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