A Federal judge has placed a hold on the $13.9 million purchase of Borders assets by Barnes & Noble while he considers privacy issues involved with the sale. The issue at hand involves an earlier Borders privacy policy that did not permit the transfer of customer names. A third-party ombudsman recommendation stated that customers covered under the old policy should have to give explicit permission before Barnes & Noble can use their data.

Lawyers for both Borders and Barnes & Noble have asked the judge to overturn those requirements, but the judge is concerned that such an action might not pass muster at the state and federal levels.

"You recognize the risk that even if I approve the transaction … the Federal Trade Commission or state Attorneys General may decide they’re not satisfied and they bring an enforcement action," the judge said at Thursday’s hearing in U.S. Bankruptcy Court in Manhattan.

Barnes & Noble’s lawyers accuse Borders of concealing the ombudsman’s report, and suggest they would be entitled to back out of their commitment to purchase if the privacy rules are not overturned.

(Found via PaidContent.)