Genetic testing company 23andMe is seeking a new owner as part of its Chapter 11 bankruptcy protection proceedings. The company emphasized that any potential buyer must ensure the protection of its data. However, an industry expert noted that data collected by the company has “always been at risk.”
The company filed for Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Missouri on Sunday to facilitate a sale process to maximize the value of its business. The company expects the process will “address the operational and financial challenges we face, including further cost reductions and the resolution of legal and leasehold liabilities.”
The company told customers the process doesn’t change how customer data is stored, managed or protected.
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“Our users’ privacy and data are important considerations in any transaction, and we remain committed to our users’ privacy and to being transparent with our customers about how their data is managed,” the company wrote. “Through this process, we will seek to find a partner who shares our commitment to customer data privacy.”
The company also said that following court approval, it will work with an independent investment banker to seek offers from interested buyers over a 45-day period and that if there are multiple offers, there will be an auction to get the best possible price. Any buyer will need to follow the law regarding how they handle customer data, and the deal will need approval from the relevant government agencies, including those that review business mergers and foreign investments in the U.S., according to the company.
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John Bringardner, head of analytics company Debtwire, told Fox Business that while “any viable bidder will be required to follow all applicable data privacy laws, the “laws only do so much to protect your data.”
He cited the 2023 data breach in which hackers stole the genetic data of nearly 7 million customers, prompting numerous federal and state class action lawsuits.
Litigation over the 2023 data breach, according to Bringardner, “helped drive up liabilities for 23andMe and force the company into the bankruptcy process it launched today.”
A month before its restructuring, 23andMe agreed to pay $30 million and give three years of security monitoring to settle a lawsuit accusing it of failing to protect the privacy of the millions of customers whose personal information was exposed the data breach.
The company has already reached out to droves of buyers, many of which could make a bid for some or all of the business during an auction scheduled to take place on May 14, according to Bringardner.
23andMe CEO Anne Wojcicki, who attempted to take the company private last year, even resigned from her role in order to make her own bid.
“I am supportive of the company and I intend to be a bidder. I have resigned as CEO of the company so I can be in the best position to pursue the company as an independent bidder,” Wojcicki posted on X.
The company said that customers still have the ability to their account and data.
“We remain committed to our users’ privacy and to being transparent with our customers about how their data is managed,” the company said.
FOX Business’ Pilar Arias contributed to this report.
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