A Florida-based company called National Public Data recently filed for Chapter 11 bankruptcy after a major data breach that made the Social Security numbers of millions of people public.
This filing was made because there were more and more lawsuits and legal actions connected to the breach. Sensitive personal information, like 272 million Social Security numbers and 600 million phone numbers of U.S. residents, were stolen.
Both National Public Data and its parent company, Jerico Pictures, have had to deal with a lot of legal and financial problems because of the breach.
The impact of the National Public Data breach on Social Security
According to court records, National Public Data filed for bankruptcy last week as lawsuits seeking money damages put more and more pressure on the company.
These lawsuits are trying to get money for damages caused by the data breach, which could have touched hundreds of millions of people.
The court papers make it clear that the company will probably have to tell a lot of people who were affected by the breach and offer them credit monitoring services.
The company’s bankruptcy case shows that a huge number of people could have been affected, which shows how big the problem was.
A hacker got into National Public Data’s computers and caused the breach, which happened in December. It was finally found on a hacking forum, where the personal information of millions of people could be shared online.
This not only got the company into more legal trouble, but it also caught the attention of government agencies. Because of the breach, more than 20 state attorneys general are now asking National Public Data to pay fines.
On top of that, the U.S. Federal Trade Commission is looking into how the company handled the private information. These cases are on top of the many class-action lawsuits that have already been brought against Salvatore Verini’s company, Jerico Pictures.
Because it is facing more legal problems, National Public Data admitted in its bankruptcy filing that it can not make enough money to cover the possible debts caused by the lawsuits and probes.
The business admits that it can not keep running its business and protect itself in court cases that are still going on. The paper says, “The business cannot make enough money to cover the huge possible liabilities, defend the lawsuits, and fund the investigations.”
The company also said that the damage to its image had cost it customers and made it harder for it to get back on its feet financially.
Companies that want to reorganize their business while being watched by the court usually file for Chapter 11 bankruptcy.
In this case, though, Jerico Pictures’ filing makes it sound like the company might not have the money to pay its court bills, such as possible fines and attorney fees. According to court papers, National Public Data made a net profit of just over $865,000 on sales of $1.2 million over the past year.
This amount is very small compared to the possible costs of the breach. This shows that the company has limited financial resources, as its net profit from the previous year was just under $500,000.
Since the company does not have much money, it looks like the main reason for filing for bankruptcy is to deal with all the cases and investigations that have been filed against it.
Because of this, the first class-action case against Jerico Pictures has been put on hold for now by a court in Florida. This delay gives the business some time to prepare for the legal battles that are coming up.
For its clients, National Public Data stored a huge amount of personal information about millions of Americans as part of its background check services.
Even though the company collected a lot of data, it looks like its security systems were not strong enough to keep this information safe from hackers. The breach not only put the company at risk of legal trouble, but it also hurt its image in the industry.
National Public Data just recently changed its website to say that it will no longer sell personal information, but the damage to its business and image has already been done.
It is not clear how the company will get out of this mess; lawsuits, investigations, and financial losses are piling up. Its filing for bankruptcy shows that it is having a very hard time paying its bills as it tries to deal with the effects of the huge data breach.