23andMe Bankruptcy Judge Ponders Trump Bill’s Injunction Impact

A judge overseeing 23andMe’s bankruptcy questioned the implications of a provision in President Donald Trump’s “big, beautiful bill” during a discussion of Canadian litigation against the company.

Judge Brian C. Walsh of the US Bankruptcy Court for the Eastern District of Missouri, while reviewing the fallen DNA testing firm’s motion to halt Canadian class actions over a cybersecurity breach, asked during a hearing Tuesday if the company would provide a security bond to support a preliminary injunction if needed.

He acknowledged that it was an “odd question” but said it was prompted by H.R. 1, legislation that, among other things, would extend Trump’s 2017 tax cuts and increase spending on military and border security. The measure also aims to restrict US courts’ ability to enforce contempt orders for failure to comply with injunctions issued without security.

“Bankruptcy lawyers know that the court can waive security for a debtor under Rule 7065, but HR 1, the One Big Beautiful Bill Act, moving through Congress, contains language that could be read to make a preliminary injunction unenforceable unless security has been provided,” Walsh said.

The provision appears aimed at limiting injunctions that might delay the administration’s mass deportation plans and other items in the Republican agenda but the broad language of the bill, if passed by the Senate and signed by Trump, could also affect bankruptcy courts. Additionally, the provision applies to injunctions regardless of when they were enacted.

The House of Representatives passed the bill in a 215-214 vote last month.

“It’s not the sort of proceeding that Congress has in mind, I’m pretty sure, but the language is vague,” Walsh said.

Max H. Siegel, an associate at Paul Weiss Rifkind Wharton & Garrison LLP representing 23andMe, said that providing security is inappropriate given the company’s financial distress and expressed uncertainty regarding the spending bill’s applicability in the proceeding.

The Canadian lawsuits, which target 23andMe’s current and former directors, officers, employees, and auditor KPMG LLP, stem from a 2023 incident in which a threat actor accessed profile data of approximately 7 million customers. The company indicated in a previous filing that the actor gained access when users reused compromised login credentials from other websites.

Walsh said Tuesday that he would sign an order based on an agreement reached by the parties granting 23andMe protection against the litigation until Dec. 3. The deal doesn’t prevent the firm from requesting an extension of the stay or the Canadian plaintiffs from objecting to such requests.

The arrangement came after 23andMe in April asked the court to apply the automatic stay that protects bankrupt companies against litigation, extend it to the additional individuals named in the Canadian lawsuits, and issue an injunction to block the proceedings during its bankruptcy. The company argued that the litigation would jeopardize its efforts to proceed with a sale and drain the estate’s resources.

23andMe is also represented by Carmody MacDonald PC. The Canadian customers are represented by KND Complex Litigation and YLaw.

The case is 23andMe Holding Co., Bankr. E.D. Mo., No. 25-40976, hearing 6/3/25.