Bankrupt 23andMe’s DNA Data Gets Sale Nod as Concerns Linger

  Bankrupt genetic testing firm 23andMe Holding Co. won permission from a judge to try to sell information about customers’ medical and ancestry-related data, a trove that is considered the most valuable asset in the insolvency case — and has become a source of privacy and safety concerns amid the company’s collapse.

Under the sale procedures, the company set quick deadlines for potential bidders, including May 7 when definitive offers are due, and a final hearing the following month. But US Bankruptcy Judge Brian C. Walsh required the company to slow the overall pace by two weeks, in part to accommodate his schedule and in part to give creditors a chance to weigh in before the court makes a final decision on a buyer.

“My overall reaction to the timeline is that it’s pretty tight,” Walsh said at the company’s first bankruptcy hearing, held in St. Louis. At his request, the company agreed to push back the final court hearing for possible sale from June 2 to June 17.

Walsh’s ruling didn’t resolve concerns raised by the looming auction of the sensitive data or complaints from shareholders about the months 23andMe spent trying to find a buyer before filing for court protection earlier this week.

23andMe hasn’t been profitable since going public in 2021 despite collecting DNA from saliva samples from more than 15 million customers. Now, those samples — and the genetic data they yielded — have become the bankrupt company’s most marketable asset, and the prospect of the sensitive information being put up for auction has sparked anxieties among customers worried about how and where of their material may be used. Bankruptcy officials have also raised concerns.

Walsh at the hearing said speed in the sale process is partly justified because the company spent so much time trying to find a buyer before it filed bankruptcy. But the goal, he added, should be to “balance the desire to move quickly with the desire to avoid collateral damage.”

Sale Oversight

Carole J. Ryczek, a lawyer with the US Trustee’s office, which acts as a public watchdog in bankruptcy court, told Walsh that a privacy ombudsman is necessary to oversee the sale of customers’ private genetic information.

The bankruptcy case “needs a neutral third party” involved in the sale process to protect customers, Ryczek said. Company lawyers and company investment bankers declined to comment on the value of the customer data.

https://finance.yahoo.com/news/bankrupt-23andme-dna-data-gets-223106622.html