Cybersecurity Policy Report, Citing State’s Genetic Privacy Law, California to Challenge 23andMe Bankruptcy Sale, (Jul 7, 2025)
A bankruptcy court’s order approving the acquisition of 23andMe Holding Co. by TTAM Research Institute (TTAM) is being appealed by the state of California because the terms of the sale would violate the rights of Californians under the state’s Genetic Information Privacy Act, according to California Attorney General Rob Bonta (D.).
“California’s Genetic Information Privacy Act (GIPA) is a straightforward statute that, relevant here, prohibits the transfer and disclosure of genetic data or biological samples to third parties ... without the ‘express consent’ of affected consumers,” AG Bonta told the U.S. Bankruptcy Court for the Eastern District of Missouri in a Friday filing (In re: 23andMe Holding Co., et al., No. 25-40976 (Bankr. E.D. Mo. Mar. 23, 2025)).
AG Bonta had warned the court in June that the transfer of Californians’ genetic data held by 23andMe to a third party needed to abide by GIPA’s provisions (CPR, June 9).
But the court late last month gave final approval to the acquisition of substantially all of 23andMe Holding’s assets, including its bank of genetic data, by TTAM, a non-profit established by Anne Wojcicki, 23andMe’s co-founder and former chief executive officer (CPR, June 30).
AG Bonta notified the court that his office would challenge its decision in U.S. District Court for the Eastern District of Missouri and asked the bankruptcy court for a partial stay of its order approving the transaction.
The requested stay, he said, would apply only to “the genetic data and biological samples of identifiable California consumers (approximately 1.8 million of the 10 million-plus portfolio).”
The bankruptcy court “held that the approved transaction did not trigger GIPA’s express-consent transfer restrictions because the transaction, although a transfer, was not to a third party,” AG Bonta noted.
“This was legal error,” he asserted. “There can be no serious dispute that the entire point of Debtors’ transaction is to transfer genetic data and biological samples from Debtors to TTAM—unquestionably, a third party. If there were any doubt—which is there is none—the purchaser confirmed that the goal of the transaction was to buy genetic data and biological samples from Debtors.”
23andMe opposed the stay request and noted that the approved transaction offered extraordinary safeguards for the genetic privacy of its customers.
“California offers no more than rank speculation that there are individuals in California who would be harmed through the TTAM Sale and who are unable to opt out. Nowhere does California articulate—let alone prove—what harm would befall these hypothetical individuals, whose data would be maintained in the same location, by the same individuals who maintained it previously, and under more robust privacy protections,” the company said in an opposition filed today.
“Having failed to persuade this Court to deny entry of the Sale Order, Movants now seek to derail a remarkably successful sale transaction—the product of many months of careful planning, which resulted in rigorous bidding and a phenomenal outcome for all of the Debtors’ stakeholders,” 23andMe told the court.
“Far from establishing that Movants are ‘likely’ to succeed on the merits of their appeal, Movants do not meaningfully engage with the Court’s 38-page Opinion and simply restate arguments that the Court previously rejected,” it said.
“Nor can Movants identify any harm they would suffer absent a stay—much less the ‘irreparable’ harm necessary to obtain relief. Every customer has today and will have in perpetuity after closing the right to delete their data at any time,” it added.
23andMe asked the court, if it granted California’s stay request, to require the state “to post a bond commensurate with the potential harm a stay may cause.”
“To protect the Debtors’ interests, the Court should (as is the default when granting a stay pending appeal) require at least a $325 million bond in an amount reflecting that a stay would impede and jeopardize approximately $305 million in value to the Debtors’ estates, plus at least $20 million in additional fees and expenses that may be caused by the stay,” the company said.
The court intends to hear arguments this afternoon regarding California’s request for a stay.
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