Judge warns privacy concerns could prevent sale of RadioShack personal data

A bankruptcy auction for RadioShack’s intellectual property is scheduled for May 11.
A bankruptcy auction for RadioShack’s intellectual property is scheduled for May 11. Star-Telegram

A Delaware bankruptcy judge said Tuesday that he’s willing to approve bid procedures for the sale of RadioShack’s intellectual property, including data on millions of customers. But he warned there’s no guarantee he will approve the sale itself.

RadioShack, which won court approval last month to sell more than 1,740 of its stores to hedge fund Standard General, is now seeking to auction off its intellectual property assets. Those assets include the RadioShack trademark, brand labels such as Realistic, patent applications and — to the consternation of state consumer protection officials around the country — information on some 67 million customers.

U.S. Bankruptcy Judge Brendan Shannon said he was willing to approve the bid procedures proposed by RadioShack, but he said that any potential bidder “with an IQ above room temperature” should know that there are serious privacy issues that may preclude court approval of the sale.

“This process will play out over the next several weeks,” said Shannon. The judge rejected a request by Texas Attorney General Ken Paxton to require separate bid allocations for the customer data — apart from the other intellectual property — in case the sale of the customer data is disallowed.

Meanwhile, RadioShack attorney Greg Gordon told Shannon that the Fort Worth-based electronic retailer has agreed to mediation with concerned state attorneys general regarding sale of customer data. Gordon said the mediation, which will include a consumer privacy ombudsman, will start May 14, after a scheduled May 11 auction but before a May 20 court hearing on whether to approve the sale.

Paxton has been joined by counterparts in at least 35 other states in opposing the sale.

RadioShack has previously said that it planned to sell customer data that included personally identifiable information on 117 million consumers. The company now is seeking to sell 8.5 million customer email addresses and some 67 million complete customer name and address files, along with what it calls “transaction data.”