Privacy Policies and the Value of Data in Bankruptcy Sales

The last few years have seen unprecedented changes in the legal landscape concerning data protection and privacy. The European Union General Data Protection Regulation (GDPR) became enforceable in May 2018. In July 2018, the California Consumer Privacy Act (CCPA) was enacted, and it became effective January 1, 2020. In response to the GDPR and the CCPA, many businesses are updating their privacy policies to comply with these laws. While crafting these updates, drafters should be cognizant of the effect such policies could have not only in the short term, but also down the road. For example, in the bankruptcy context, the content of a company’s privacy policy is important. If a privacy policy does not inform customers that their data may be sold in a bankruptcy proceeding, courts are likely to impose restrictions on the sale of that data. These restrictions can significantly decrease the value of such assets. Because of this reality, drafters should keep a few considerations in mind as they update privacy policies to comply with new laws and maximize the value of data assets.

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