Chapter 15 Customer Privacy in Bankruptcy

• Jurisdiction: United States

Chapter 15 Customer Privacy in Bankruptcy

Privacy is increasingly a concern as more data hackers and identity thieves proliferate. The Federal Rules of Bankruptcy Procedure address these issues in relation to bankruptcy. Bankruptcy courts have also adopted local rules and practices to protect personally identifiable information. Application of these rules must be balanced against the general policy that bankruptcy is an open proceeding to which the public is entitled to have access.

A. Trade Secrets, Confidential Business Information, Scandalous or Defamatory Material (11 U.S.C. § 107 (Public Access to Papers))

Section 107 of the Bankruptcy Code provides that generally, the papers filed in bankruptcy cases and the dockets of bankruptcy cases are public records and open for the public to view.¹⁴² There are certain circumstances in which a bankruptcy court may take action to protect information in papers and on the docket. For example, trade secrets, confidential research, development or commercial information, or scandalous or defamatory matter may be placed under seal at the request of a party in interest or unilaterally by the bankruptcy court.¹⁴³ Other information may be protected by the bankruptcy court for cause if it would create undue risk of identity theft or other unlawful injury to an individual or property, such as exposing any "means of identification" as that term is defined in 18 U.S.C. § 1028(d) or "other information."¹⁴⁴

Certain entities are permitted to have full access to information nonetheless. An entity exercising the police or regulatory power of the government may obtain access to protected information by making an ex parte application for cause.¹⁴⁵ Also, the UST, Bankruptcy Administrator, trustee and auditors under contract with the UST are granted full access to protected information, although they are prohibited from disclosing it.¹⁴⁶

B. Identification of People, Companies and Bank Account Numbers (Federal Rule of Bankruptcy Procedure 9037)

Certain information must be redacted from all court filings, unless the court orders otherwise. This information includes Social Security numbers, Tax Identification numbers, birthdays, the names of minor individuals and financial account numbers.¹⁴⁷ The names of minor children are particularly protected under the Bankruptcy Code.¹⁴⁸

So how does one identify people, companies, minors and bank account numbers? Congress has provided that the following information may be used in public filings: the...