Bankruptcy Vendors Under Fire for Mishandling Private Info

Recent errors by bankruptcy service vendors are prompting some judges and attorneys to critically examine how those providers handle sensitive information.

The vendors, known as claims agents, have drawn attention over the last month in a Norwich, Connecticut-based Catholic diocese bankruptcy when one of them accidentally disclosed private information about sex abuse survivors. The survivors said the incident was traumatizing and promptly sued.

Around the same time, several claims agents in separate cases faced accusations from the Justice Department of harming the “basic integrity” of the bankruptcy system by failing to disclose that they were selling creditor data to another ...