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 percent 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 percent had corporate Twitter accounts and 80 percent 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, 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.

Social Media Case Law

Section 541(a)(1) of the Bankruptcy Code defines property of the estate, with certain exceptions, as “all legal or equitable interests of the debtor in property as of the commencement of the case.” As the U.S. Supreme Court held in United States v. Whiting Pools, the scope of section 541 is broadly construed and “includes all kinds of property, including tangible or intangible property [and] causes of action.” While the Bankruptcy Code provides a basis for determining the scope of the bankruptcy estate, it does not specify what constitutes property. In order to reach that determination, bankruptcy courts must look to nonbankruptcy law.

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