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Treatment of Social Media Accounts In Bankruptcy

By Shmuel Vasser and Negisa Balluku

In today's digital marketplace, understanding how the law applies to virtual assets is becoming as important as understanding how it applies to the brick-and-mortar world. According to studies conducted by the Center for Marketing Research at the University of Massachusetts Dartmouth, in 2014, 93% of the Inc. 500 ' the fastest-growing private U.S. companies, as compiled by Inc. Magazine ' used at least one social media platform. Similarly, of the Fortune 500 companies in 2014, 83% had corporate Twitter accounts and 80% had Facebook accounts, among several social media tools.

Despite the importance of the Internet to commerce, however, it is still unclear how important provisions of bankruptcy law apply to certain virtual assets. For example, do social media accounts constitute property of the bankruptcy estate? A recent case decided by a Texas bankruptcy court, In re CTLI, No. 14-33564, suggests that the answer is far from clear. It seems to depend on a granular analysis of the social media page in question and how closely that page is tied to the business sponsoring it.

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