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Section 363 sales and customer data: when a consumer privacy ombudsman is needed
In a US bankruptcy, a sale of personal information can trigger the appointment of a consumer privacy ombudsman. What trustees should know before licensing company records.
Section 363 of the US Bankruptcy Code lets a trustee, or a debtor in possession, sell estate property. Sales outside the ordinary course need notice and court approval.
The privacy trigger
Under 11 U.S.C. §363(b)(1), if the company's privacy policy at the time of filing prohibited transferring personally identifiable information, the court can approve such a sale only in limited circumstances, and usually after appointing a consumer privacy ombudsman under §332. The ombudsman reports to the court on the privacy issues and on alternatives.
Why this matters for records
Licensing operational records to an AI developer is easier to approve when personal data has been removed or properly de-identified first. Tickets, documents and chat threads with people taken out raise fewer privacy questions than customer lists.
Checklist for trustees
- Read the privacy policy in force at filing, and any customer contract terms on data.
- Plan de-identification before any sample is prepared; exclude employee, payment and health data.
- Expect to seek court approval and, where the trigger applies, an ombudsman's report.
- Check fit: micro1 lists companies that are no longer operating, with 30+ peak employees and English records company.micro1.ai/get-started · 15 Nov 2026.
General information, not legal advice. See the US enterprise guide for the full sequence.
