Pryor Cashman Partner Seth Lieberman, Chair of the Bankruptcy, Reorganization + Creditors' Rights Group and Co-Chair of the Corporate Trust Practice, was quoted in a Law360 Bankruptcy Authority article examining Google’s bid to purchase data from defunct Spirit Airlines as part of the company’s Chapter 11 bankruptcy proceedings.

In the article, “Spirit's Ch. 11 Sale Offers AI New Data, With Privacy Concerns,” Seth discussed the unusual nature of the proposed $10 million data sale, which includes company code, internal emails and chats, employment data, aircraft operations and financial information. He noted that the sale’s repeated delays demonstrate the concerns surrounding this bespoke bankruptcy asset:

“There’s lots of buzzwords. Google. AI. It’s really opened up the eyes of many out there, including labor unions. It’s a reasonable fear of the unknown.”

The article also examined objections from labor unions representing Spirit employees, which raised concerns about the potential sale of employee information, including tax forms, crew assignments and grievances. Seth explained that the Bankruptcy Code’s privacy protections focus on consumer information and do not expressly address employee information:

“I don’t know how much [support] these arguments have.”

Seth further addressed a report from the court-appointed privacy ombudsman, who raised concerns that the data could contain incidental information about Spirit passengers. While the ombudsman warned that the data could potentially be used to build individual profiles, Seth noted that the ombudsman did not formally object to the sale or state that the proposed de-identification procedures were inadequate:

“It certainly falls short of saying that directly.”

The article explores the broader implications of bankruptcy data sales as AI companies look to acquire large datasets for training and developing AI products, as well as the privacy considerations that may shape how these assets can be monetized in future bankruptcy proceedings.

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