Cybersecurity Policy Report, 23andMe Bankruptcy Sale Should Be Unwound Over Privacy Law Violation, California AG Says, (Oct 21, 2025)
The bankruptcy sale of 23andMe Holding Co., which seemed to be a done deal over the summer, is still being challenged by California Attorney General Rob Bonta (D.), who asked a federal court yesterday to unwind the sale because it violated California’s Genetic Information Privacy Act (GIPA).
23andMe completed the sale of its assets to TTAM Research Institute in July with the blessing of the U.S. Bankruptcy Court for the Eastern District of Missouri after that court and the U.S. Court of Appeals for the Eighth Circuit (St. Louis) denied AG Bonta’s request for a stay (CPR, July 14).
But AG Bonta continued his challenge in U.S. District Court for the Eastern District of Missouri (CPR, Aug. 13). In a filing yesterday, he argued that 23andMe and TTAM knew the transaction violated GIPA but proceeded with it anyway (The People of the State of California v. 23andMe Holding Co., No. 25-cv-00999 (E.D. Mo. July 7, 2025)).
“It is undisputed that the bankruptcy court’s sale order deprived 1.8 million Californians of their rights under GIPA to choose who controls their genetic information. Debtors could have complied with GIPA by simply asking these Californians for permission and persuading them that the sale of their most sensitive personal information was in their interest. Debtors instead chose a path that trampled GIPA’s consumer-consent rights,” AG Bonta told the court.
“Sale Proponents say that complying with GIPA’s consumer-consent requirements would have resulted in less value to creditors (and even shareholders). Thus, rather than accept a reduced sale price, Debtors improperly used bankruptcy to monetize the evasion of GIPA,” he said.
The sale was “restructured at the last minute” by inserting an intermediary company into the mix, NewCo, and calling it a 23andMe subsidiary as a gambit to avoid the requirements of GIPA, AG Bonta alleged. The plan paid off, he noted, because the bankruptcy court ruled that GIPA didn’t restrict the transfer of genetic data from a parent company to a subsidiary.
“Despite GIPA’s plain language, the bankruptcy court erroneously held that GIPA has an ‘implicit’ exception for affiliates and subsidiaries,” AG Bonta said.
“GIPA is unambiguous. It has just two exceptions: ‘service providers’ and certain ‘educational institutions,’” he said. “Corporate affiliates and subsidiaries, like NewCo, are third parties under GIPA’s plain language. There is no exception for them.”
23andMe, meanwhile, suggested that AG Bonta should be careful what he wished for. If the sale is unwound, it told the court in an earlier filing, the company would “face the prospect of liquidation, and a loss of control over the genetic data about which California purports to be concerned.”
“California seeks to unwind a $302.5 million sale of the Debtors’ assets to TTAM in a transaction that closed nearly three months ago, after the Bankruptcy Court carefully considered and approved that transaction in a thoughtful 38-page opinion following a two-day hearing,” the company noted.
“In seeking that incredible relief, California merely recycles the same arguments the Bankruptcy Court already rejected, and that this Court and the Eighth Circuit already found did not justify a stay,” the company added. “California offers no new argument that has not previously been considered and rejected by multiple courts, and the Bankruptcy Court should be affirmed.”
MainStory: TopStory FederalLegislation StateLegislation LitigationEnforcement DataPrivacy