528 B.R. 359
Bankr. S.D. Tex.2015Background
- Chapter 11 debtor CTLI, LLC (Tactical Firearms) faced a dispute with former majority owner Jeremy Alcede over control of the debtor’s social media accounts.
- The Plan Agent (Steven Coe Wilson) proposed that the reorganized debtor receive 100% ownership and control of the social media accounts upon plan confirmation.
- Alcede claimed the Facebook Page and Twitter account were his personal property and raised privacy objections to sharing control.
- The Confirmation Order instructed transfer of passwords for the debtor’s social media accounts to the reorganized debtor, which Alcede initially refused.
- Court held business social media accounts are property of the estate (and reorganized debtor) and denied Alcede’s privacy objections; ordered transfer of admin rights to the reorganized debtor on Facebook and Twitter.
- Court concluded that the former Tactical Firearms Facebook Page and the Twitter account were business pages tied to the debtor, not personal property of Alcede.
- Court acknowledged potential issues involving goodwill and privacy but found no constitutional bar to enforcing the Confirmation Order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are business social media accounts property of the estate? | Alcede: accounts are his personal property; privacy concerns. | Estate: accounts are business property used for debtor operations. | Yes; business accounts are property of the estate and vest in the reorganized debtor. |
| Are the Facebook Page and Twitter account properly characterized as business accounts, not personal accounts? | Alcede: accounts are personal; thus not estate property. | Accounts were created and used for business purposes; belong to debtor. | The accounts are business pages belonging to the reorganized Debtor. |
| Does the court have constitutional authority to issue a final order enforcing the Confirmation Order? | Stern v. Marshall limits bankruptcy judges’ final authority. | Dispute arises under 1142 and federal/common law; not solely state law. | Court has constitutional authority to enter a final order as to plan implementation. |
| Does transferring control violate Alcede’s privacy rights in his personal communications? | Privacy rights in personal accounts are implicated. | Accounts were property of the debtor; privacy interests waived. | No; privacy rights waived in light of property status and use; transfer allowed. |
| What relief is appropriate to effect transfer of control? | Transfer admin rights to reorganized Debtor; preserve business functions. | Order transfer of admin control to Debtor on Facebook and Twitter; allow further Facebook relief if needed. |
Key Cases Cited
- In re Borders Group, Inc., 2011 WL 5520261 (Bankr.S.D.N.Y. 2011) (cited for treatment of social media as property (WL reporter unavailable))
- In re U.S. Brass Corp., 301 F.3d 296 (5th Cir. 2002) (bankruptcy court authority under 1142 and plan consummation)
- In re Craig’s Stores of Texas, Inc., 266 F.3d 388 (5th Cir. 2001) (bankruptcy court authority and plan implementation)
- Butner v. United States, 440 U.S. 48 (1979) (property interests determined by applicable state law unless Code speaks)
- Travelers Indem. Co. v. Bailey, 557 U.S. 137 (2009) (courts enforce confirmation orders to ensure plan implementation)
- Stern v. Marshall, 131 S. Ct. 2594 (2011) (limits on bankruptcy court final authority where state-law issues predominate)
- Miller v. Blattner, 676 F. Supp. 2d 485 (E.D. La. 2009) (lack of privacy in work email where company owns property)
- Brown v. Ames, 201 F.3d 654 (5th Cir. 2000) (persona as property interest under Texas law)