National Public Data, a Florida-based corporation, recently filed for Chapter 11 bankruptcy following a major data breach that exposed millions of people’s Social Security numbers.
This declaration was triggered by escalating lawsuits and legal actions stemming from the breach, which resulted in the theft of sensitive personal data, including 272 million Social Security numbers and 600 million phone numbers of US individuals. The breach has resulted in significant legal and financial ramifications for National Public Data and its parent business, Jerico Pictures.
The impact of the National Public Data breach on Social Security
According to court papers, National Public Data filed for bankruptcy last week as it faced rising pressure from lawsuits seeking financial recompense. These legal lawsuits seek damages for the data breach, which may have affected hundreds of millions of people.
According to court filings, the corporation will most likely be required to notify a huge number of customers affected by the breach and give credit monitoring services. The company’s bankruptcy declaration discloses an enormous number of people who could be affected, emphasizing the scope of the tragedy.
The incident, which occurred in December, was caused by a hacker penetrating the National Public Data network. The stolen data eventually made its way to a hacking site, where millions of people’s personal information circulated. This not only exacerbated the company’s legal issues, but also caught the attention of regulatory authorities.
More than 20 state attorneys general have demanded civil penalties from National Public Data as a result of the leak. Furthermore, the US Federal Trade Commission has opened an investigation into the company’s handling of sensitive data. These cases are in addition to the several class-action lawsuits filed against Jerico Pictures, which is owned by Salvatore Verini.
In response to mounting legal demands, National Public Data indicated in its bankruptcy case that it lacks sufficient revenue to satisfy any liabilities resulting from litigation and investigations. The company concedes that it cannot defend itself against ongoing legal proceedings while continuing to conduct business operations.
The paperwork goes as follows: “The enterprise cannot generate sufficient revenue to address the extensive potential liabilities…defend the lawsuits and support the investigations.” Furthermore, the company argued that the damage to its reputation had resulted in a loss of clients and hampered its ability to recover financially.
Chapter 11 bankruptcy is often filed by businesses seeking to restructure their operations under judicial supervision. However, in this case, Jerico Pictures’ filing indicates that the corporation may lack the financial capacity to meet its legal responsibilities, including attorney fees and possible penalties.
According to court filings, National Public Data had a net profit of slightly more than $865,000 on $1.2 million in revenue last year, a figure that pales in comparison to the potential expenses of the breach. The previous year’s net profit was just under $500,000, showing the company’s weak financial capabilities.
Given these financial limits, it appears that the major purpose of the bankruptcy filing is to manage the various lawsuits and investigations filed against the corporation. As a result of the filing, the first class-action lawsuit against Jerico Pictures has been temporarily halted in Florida. This postponement allows the company some breathing room as it faces the legal battles ahead.
National Public Data had been providing background check services to its clients, which included keeping massive volumes of personal information about millions of Americans.
Despite the company’s role in data aggregation, it appears that its security systems were insufficient to safeguard this information against cyberattacks. The breach not only exposed the corporation to legal ramifications, but it also harmed its reputation in the industry.
Although National Public Data just modified its website to announce that it will no longer sell personal data, the company’s reputation and business have already suffered.
With lawsuits, investigations, and financial losses stacking up, it’s unclear how the corporation will recover from this catastrophe. Its bankruptcy declaration demonstrates the significant financial strain it is experiencing as it strives to manage the aftermath from the enormous data breach.
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