Bankruptcy judge approves RadioShack data auction, but not sale

A Delaware bankrutpcy judge has agreed to approve bidding procedures for the sale of RadioShack's intellectual property, which includes millions of customers' data. He has not promised to approve the sale itself, should a bid be accepted. 

RadioShack won approval to sell more than 1,740 of its stores to hedge fund Standard General last month, and now the iconic tech retailer seeks to auction intellectual property assets, including the RadioShack trademark, store brand names such as Realistic, patent applications, and data on about 67 million customers, the Associated Press reported.

The Texas attorney general's office, supported by its countarparts in at least 35 other states, is leading the regulatory charge in the case and still questions various details of the sale, which had been put on hold.

The U.S. Bankruptcy Judge Brendan Shannon said he is willing to go along with the auction procedures requested by RadioShack, but said any potential bidder "with an IQ above room temperature" should understand the privacy issues that could preclude court approval of the sale.

"This process will play out over the next several weeks," Shannon said. The judge rejected a request by the Texas attorney general to require that the customer data be bid on separately from other intellectual property in case the customer data sale is not allowed.

Gordon, an attorney representing RadioShack, told the judge that the retailer has agreed to mediation with concerned state attorney generals regarding the sale of customer data. The mediation will include a consumer privacy ombudsman and will start May 14 after a scheduled May 11 auction. However, it will precede a May 20 court hearing on whether to approve the sale.

The Texas attorney general's office still has questions about what information might be sold. Previously the company said the proposed sale would include personally identifiable information on 117 million customers, but that number has since been scaled back to 8.5 million customer email addresses and about 67 million customer name and address files, along with "transaction data."

A consultant assisting in the intellectual property sale process testified Tuesday that RadioShack's transaction data could include as many as 200 separate fields, including information on what was purchased, where and when, by whom, and for how much.

Hal Morris, representing the Texas attorney general's office, argued that RadioShack should be required to disclose more information about what is included in its transaction data. Shannon agreed but declined to require RadioShack to identify all 200 fields in the customer database.

"I do believe that additional disclosure is necessary with respect to the phrase 'transaction data,'" Shannon said. He suggested that RadioShack add a few sentences in its summary description to include "the sorts of things that I think the typical person might find interesting."

Meanwhile, attorneys for Verizon Wireless and AT&T have argued that RadioShack cannot sell subscriber information or other data pertaining to customers who purchased cellphones or wireless plans at RadioShack stores.

Texas Attorney General Ken Paxton had previously argued that such a sale of customer data would violate privacy policies RadioShack had put in writing. "RadioShack gave customers explicit assurances it would not sell their personal information, and that company's attempts to sell this data would not only be a direct violation of the terms of its own privacy policies, but also a clear violation of Texas law," he said in a written statement released in March. "We will vigorously fight to protect consumers' personally identifiable information."

For more:
-See this Associated Press story
-See this Dallas Business Journal story

Related stories:
Sprint opens 1,400 co-branded RadioShack stores
RadioShack files for bankruptcy
RadioShack selling brand and locations separately
Standard General acquires RadioShack, appoints new CEO
RadioShack maps road ahead, considers new name

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