What is a consumer privacy ombudsman?
The short answer
A consumer privacy ombudsman is a person appointed under 11 U.S.C. 332 when a bankruptcy debtor proposes to sell consumer personal information against its privacy policy. The ombudsman reports to the court on privacy, gains and losses. The court decides whether to approve the sale.
This job only exists inside a bankruptcy case. It comes straight from the Bankruptcy Code, so a state-law assignment for the benefit of creditors has no ombudsman.
When does a court need one?
Section 363(b)(1) says a trustee may sell personally identifiable information only if the sale fits the debtor's own policy.
If it doesn't, the court can appoint an ombudsman under section 332. The court holds a notice and hearing. It can then approve the sale anyway. It does so by finding that "no showing was made" the sale would violate applicable nonbankruptcy law.
All of this starts only when the debtor's posted policy barred transfer to unaffiliated parties before the case began.
What does the ombudsman do?
Section 332 tells the court to order the US trustee to appoint one disinterested person. That must happen no later than 7 days before the sale hearing.
The ombudsman gives the court information. The court decides.
What counts as personally identifiable information under the Bankruptcy Code?
Section 101(41A) of the Bankruptcy Code covers information an individual gave the debtor to get a product or service "primarily for personal, family, or household purposes."
Think name, address, email address, phone number, Social Security number or credit card number.
That is a consumer definition. Employee and business records don't clearly fit it. That is my reading and not a court ruling.
What happened in the Spirit Airlines case?
In the Spirit Airlines case, the ombudsman's supplemental report (Doc 1684, 5 Oct 2026) recommends approval of the deidentified-data sale from a privacy view.
Footnote 3 says she did not look into risk to affected employees or third parties, and reached no conclusion on it.
Footnote 4 says technology "has far outpaced the law" on reidentification. I'd read that one twice.
The sale was not approved in the filings I read. If your own records are in play, see licensing HR and payroll records. Talk to a bankruptcy lawyer in your state before you sign anything tied to an insolvent company.
For non-bankruptcy shutdowns, read shutting down and licensing Slack.
Vaultfish helps you run the process. We are not lawyers and this is not legal advice. If you need counsel who knows this area, we can point you to one. Ask for a referral
