Bankruptcy vs. Privacy Law
At the heart of the case lies a thorny legal question: Can state privacy laws constrain federal bankruptcy sales?
California says yes, warning that Judge Walsh’s decision sets a dangerous precedent. “This appeal is about the failure of 23andMe and its debtors to comply with GIPA in their transfer of nearly 2 million Californians’ genetic information,” the filing states.
The state also blasted the transaction as too complex for Section 363 sales, arguing it resembled a full-blown Chapter 11 reorganization disguised as a sale.
Millions of DNA Profiles at Stake
23andMe, once a Silicon Valley darling known for its at-home DNA kits, filed for Chapter 11 in March amid financial turmoil. With a database of over 15 million genetic profiles, the bankruptcy ignited national debate on whether consumer DNA—among the most sensitive personal information—should be treated like any other asset.
Privacy watchdogs had already raised alarms in June, warning that genetic data should not be sold without explicit customer approval. Still, Judge Walsh allowed the transfer to TTAM, which has since rebranded itself the 23andMe Research Institute.
