USA: Leaked data trader files for bankruptcy
Following a huge data leak, the data broker National Public Data is facing numerous class action lawsuits and is now filing for bankruptcy protection.
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Florida-based data broker National Public Data has filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. The company, which specializes in background checks, is facing a wave of litigation after hundreds of millions of Social Security numbers and other personally identifiable information were stolen in a data leak.
National Public Data filed for bankruptcy in the United States Bankruptcy Court for the Southern District of Florida in Fort Lauderdale in late September (Case No. 24-20281) as its parent company Jerico Pictures faces huge claims for damages. The computer magazine PC Magazine first reported on the case last week. Jerico Pictures estimates that it will have to notify "hundreds of millions of potentially affected individuals" and pay for credit monitoring.
Many millions of data records leaked
In December last year , cyber criminals managed to break into the systems of National Public Data. The first data leaks became known in April 2024, when the threat actor "USDoD" offered the stolen data for sale for 3.5 million US dollars. This data is said to contain names, email addresses, telephone numbers, social security numbers and postal addresses, among other things. According to estimates by security researchers, 272 million social security numbers of US citizens and 600 million telephone numbers were stolen in the data theft.
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The US Federal Trade Commission (FTC) is investigating the case and more than 20 states are threatening National Public Data with civil penalties for data breaches. In addition, numerous class action lawsuits have already been filed against Jerico Pictures. The company is accused of failing to adequately protect the personal data of millions of people.
Filing for bankruptcy against a flood of lawsuits
As a rule, companies file for Chapter 11 bankruptcy in order to achieve a court-supervised restructuring of the company's finances. However, the court documents indicate that Jerico Pictures does not have the necessary funds to pay legal fees and potential penalties. The company "cannot generate sufficient revenues to pay the substantial potential liabilities, let alone defend against the lawsuits and support the investigations," it says. Accordingly, the debtor's insurance company has denied coverage. According to documents filed in court, Jerico Pictures has between 25,000 and 75,000 US dollars in total assets. In its income statement, the company states net profits of USD 475,526 in 2022 and USD 865,149 in 2023.
It looks like the bankruptcy filing is intended to help the company cope with the flood of lawsuits, writes PC Magazine. The magazine reports that as a result of the bankruptcy filing, the first class action lawsuit filed against Jerico Pictures has been temporarily stayed by a Florida court.
(akn)
