When a California company dissolves, typically it can transfer its property to another company through an asset sale.

Borders, the nationwide bookseller, has been selling off its assets since announcing its plan to liquidate in July. Borders filed for bankruptcy in February. This means that a judge must approve the sale of its assets while the company liquidates.

Recently, Barnes & Noble agreed to purchase at auction some of Borders' intellectual property for $14 million. Included in its purchase is the 48-million-member customer database of is former competitor. The auction of Borders' intellectual property raised a total of $15.8 million.

The judge hesitated about allowing the sale to take place because of state and federal regulations that might affect the sale. At issue was whether customer privacy would be violated in the acquisition of the customers' private information. Both companies, however, argued that privacy standards are not infringed upon because Barnes & Noble is in the same business as Borders, and because it also has a strong privacy policy itself.

It appears that Barnes & Noble will be allowed to purchase Borders' intellectual property. As part of the deal, the booksellers agreed to allow customers 15 days to opt out of the customer information transfer. An email will be sent after the deal closes.

In addition, it was agreed that an ad would be placed in USA Today in order to give customers information about opting out of the transfer of private information. So far, no objections from the Federal Trade Commission or from state attorneys general have been raised.

Source: Reuters, "Borders, B&N get court's OK on $14 million IP sale," Nick Brown, Sept. 26, 2011