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Administration Seeks Comment on Financial Privacy and
Bankruptcy
Due to the recent Toysmart.com case that concerns the practice of
bankrupt companies seeking to sell personal data regarding their former
customers, the Clinton Administration is seeking public comment on
privacy protection and the treatment of sensitive financial information
such as social security numbers, credit card and bank account numbers in
bankruptcy cases, according to a Department of Justice press release.
The president announced the Clinton-Gore Plan to enhance consumers'
financial privacy, including a study of privacy needs of debtors in
bankruptcy in April. As part of the plan, Department of Justice, the
Department of Treasury and the Office of Management and Budget are
asking the public for input on how to protect privacy in bankruptcy
cases, particularly in the information age.
Their study and subsequent information will examine how the privacy
interests of debtors in personal bankruptcy cases are affected by the
public availability of information they submit as part of the bankruptcy
process. The study will also examine the need for public access to
information filed in bankruptcy cases. In both the privacy and
open-access areas, the study will focus on the impact of changes in
business practices and technology. The agencies' request for information
will be posted on the DOJ's Web site at
HREF='http://www.usdoj.gov/ust'>http://www.usdoj.gov/ust and will
also appear in the Federal Register.
Toysmart Wants Better Offer for Its Customer List
Toysmart.com yesterday withdrew from auction a controversial packet of
customer information it had hoped to sell to pay off its debts, saying
it had yet to receive a good enough offer, according to a newswire
report. Yesterday's request to withdraw from auction was granted by U.S.
Bankruptcy Judge Carol Kenner. The highest offer for the
information was $50,000, which came from Walt Disney Co. Disney, which
owns the majority of Toysmart, has promised if allowed to purchase the
information they will destroy it.
Toysmart filed chapter 11 in June, then solicited bids for its
assets, including about 250,000 customer names, addresses and credit
card numbers. The attempted sale then drew a lawsuit from the Federal
Trade Commission (FTC). The suit was settled earlier this month,
allowing the Waltham, Mass.-based company to sell the data under certain
restrictions. But 38 states said the settlement didn't go far enough to
protect consumers, and on Tuesday they filed legal papers to block it.
Lawyers representing Massachusetts, as well as Texas and New York, who
are also contesting the FTC settlement, said in court Wednesday that the
sale of the informationeven if the buyer were to agree to destroy
the informationwould establish a dangerous precedent. Kenner
granted Toysmart.com's request to withdraw the items from auction for
the time being, but strongly indicated she felt the states had a strong
case in contesting Toysmart.com's settlement with the FTC. 'Had the
debtor not withdrawn the sale today, I would have sustained the
attorneys general's objections,' Kenner said. Yesterday's hearing drew a
large number of lawyers representing bidders, public interest groups,
the states and the FTC. Many believe the case will set precedents in an
area of the law that is so far unchartedwhether dot-coms can be
held to promises about keeping customer data private after they go
bankrupt.
U.S. Bankruptcy Judge Announces Challenge to His Denied
Reappointment
U.S. Bankruptcy Judge David A. Scholl announced in open court last week
that he is 'challenging' the decision of a 12-judge appeals panel to
deny his reappointment to a second 14-year term, according to a newswire
report. Cletus P. Lyman of Philadelphia, Scholl's lawyer, confirmed that
Scholl has demanded a hearing before the 3rd Circuit. Lyman then said
the request was denied last week in a letter from the general counsel of
the Administrative Office of the U.S. Courts. Lyman said, 'No decision
has yet been made' when asked if Scholl is planning to file suit in
court to challenge his non-reappointment. Since the court voted 11 to 1
against Scholl's reappointment, the 3rd Circuit's decision is likely to
survive any court challenge.
Mossimo Announces Dismissal of Involuntary Bankruptcy
Petition
Mossimo Inc. yesterday announced that the U.S. Bankruptcy Court
dismissed the involuntary bankruptcy petition filed against the company
on May 16, according to a newswire report. Founder and President Mossimo
Giannulli said, 'We are pleased to have this issue resolved and we can
now fully concentrate our energies on growing our business with the
Target Corp.' The Irvine, Calif.-based designer sportswear company was
founded in 1987.
Invensys Saves Baan From Bankruptcy
Britain's Invensys agreed yesterday to take control of the Dutch
software firm, Baan Company NV, under less stringent conditions and
spare it from bankruptcy, according to a newswire report. Invensys said
it had launched a four-point plan to save the Amsterdam-based company
and would take immediate management control of the firm in a deal worth
$762 million euros ($715 million). The British industrial controls group
announced its plans to buy Baan on May 31 and said it would honor its
bid for Baan even though shareholders representing only 75 percent of
Baan shares had accepted its 2.85 euro per share offer. Previously,
Invensys had insisted that it control 95 percent of the stock. It
revised that condition yesterday to 50 percent plus one share. Invensys
will also acquire all the assets and liabilities of Baan.
National Health & Safety Files Third Amended Reorganization
Plan
National Health & Safety Corp. announced yesterday that it has filed
a third amended disclosure statement with respect to the third amended
joint plan of reorganization for approval by the bankruptcy court and
consideration by its creditors and stockholders, according to a newswire
report. For some time, the Horsham, Pa.-based company and MedSmart
Healthcare Network Inc., together with KJE Ltd., have experienced delays
in the court's approval of a plan that would lead to the reorganization
of the company. During this time, the co-proponents have implemented
changes to their businesses. The company and the co-proponents have
entered into an in-depth reevaluation and renegotiation of terms that
would lead to a successful restructuring of the company. A court hearing
has been set for Aug. 21.
Harnischfeger Says It Has Reorganization Plan; Working On
Claims
Harnischfeger Industries Inc. said in a recent bankruptcy court filing
that it has drafted a plan of reorganization and is meeting with its
official committee of unsecured creditors to resolve certain issues,
including intercompany claims. The pulp, paper and mining equipment
manufacturer says it has made significant progress toward filing a
feasible plan of reorganization. However, Harnischfeger adds that 'a
great deal of work and negotiation, however, must still be accomplished
before a consensual reorganization plan can be filed with the
court.'
Courtesy
of
href='http://www.fedfil.com/bankruptcy/developments.htm'>The Daily
Bankruptcy
Review Copyright © July 27,
2000.
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