(Credit: Douglas Sacha via Getty Images)
The Florida company responsible for a major leak of Social Security numbers has filed for Chapter 11 bankruptcy.
According to court documents, National Public Data filed for bankruptcy last week as its parent company, Jerico Pictures, faces a wave of lawsuits demanding it pay damages.
The bankruptcy filings reveal that the company estimates it’ll need to notify and pay for credit monitoring “for hundreds of millions of potentially impacted individuals.” That’s because the breach led a hacker to steal a trove of data containing 272 million unique Social Security numbers from US residents, along with 600 million phone numbers.
(Credit: Jerico Pictures)The court documents also reveal that attorneys general from more than 20 different states are demanding National Public Data pay civil penalties for allowing the breach to occur. The US Federal Trade Commission is also scrutinizing the company. This arrives on top of numerous class-action lawsuits that have already been filed against Jerico Pictures, which is owned by Salvatore Verini.
As a result, the company says in the bankruptcy filing: “The enterprise cannot generate sufficient revenue to address the extensive potential liabilities...defend the lawsuits and support the investigations.” Plus, the "reputational impact has driven customers from" National Public Data.
Companies usually file Chapter 11 bankruptcy for a court-ordered reorganization of the business. But Jerico Pictures' bankruptcy filing suggests it won’t have the funds to pay its legal bills, in addition to potential penalties. A court document shows the company only made a net profit of $865,149 on revenue of $1.2 million last year and $475,526 in 2022.
(Credit: Jerico Pictures)Instead, it looks like the bankruptcy filing is meant to help the company manage the barrage of lawsuits. Due to the bankruptcy filing, the first class-action lawsuit filed against Jerico Pictures has been temporarily stayed by a court in Florida.
National Public Data offered its clients a way to perform background checks but somehow amassed sensitive data on millions of Americans. In December, a hacker breached the company’s IT systems, which eventually caused the stolen data to circulate widely in a forum devoted to computer hacking.
Last month, National Public Data updated its website to note that it’s no longer selling people’s personal data. But it’s clear the damage is already done.