Companies in financial distress confront a paradox. On the one hand, data is often among the most valuable assets available to preserve enterprise value and drive a successful reorganization or sale. On the other, mishandling that same data, especially personal and sensitive information, can destroy trust, invite regulatory scrutiny, and materially depress value at precisely the moment stakeholders most need stability. Data protection is also expensive, and in a bankruptcy environment, the last thing that you need is yet another cost to lessen the pool of funds available to operations and creditors. For debtors, boards, and restructuring professionals, data privacy and security are not peripheral concerns; they are central to fiduciary duty, operational continuity, and transaction integrity during Chapter 11. They might even make the difference between having salable assets and not.
Even after 10 years, the 2015 RadioShack bankruptcy remains a cautionary tale in privacy circles. It vividly demonstrates how legacy privacy promises, uneven data governance, and the pressures of a distressed sale can collide, generating reputational, legal, and economic consequences. Since then, the privacy landscape has only grown more complex: State privacy statutes proliferate, federal and state regulators elevate expectations, and counterparties place increased emphasis on cyber diligence. At the same time, threat actors view distressed companies as soft targets due to resource constraints and staffing disruptions. The takeaway is clear: Thoughtful privacy and security planning is not merely risk mitigation; it is value preservation.
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