Business Facebook & Twitter accounts belong to bankruptcy estate, says Houston court

J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
Posted on Apr 21, 2015

In a dispute concerning a Katy, Texas firearm store that was in chapter 11 reorganization, a bankruptcy court in Houston on April 3, 2015 ruled that business social media accounts including a Facebook fan page and a Twitter account, belonged to the business. The court ordered one of the prior owners, a Mr. Alcede to turn over the passwords and administrative privileges to the new owner. In re CTLI, LLC, Case No. 14-33564, U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.

The Court stated in part in an introduction to the 30 page opinion:

This Court concludes that business social media accounts are property of a company's bankruptcy estate. Finding that the accounts at issue are business and not personal accounts, the Court now orders the former owner to transfer administrative privileges to these accounts immediately to the reorganized debtor. Finally, this Court analyzes all possible property or privacy interests that the former owner might have in the debtor corporation's social media accounts. The Court concludes that requiring the former owner to transfer administrative privileges to the reorganized debtor does not violate any privacy rights that he claims to have.

Subsequent to this ruling, on April 9, 2015 Mr. Alcede was ordered to be taken into custody for failing to comply with the Court's orders, and to be held by the U.S. Marshal's Service until he indicates that he is ready to comply with the April 3 order. As of April 21, 2015, Mr. Alcede remains in the custody of the U.S. Marshal's service.

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