Data breach leads to a US medical records firm's bankruptcy

Here’s a glimpse on what privacy breaches can bring upon a company.

The Wall Street Journal informs that The New Year’s Eve burglary of a California office building has led to the collapse of Impairment Resources LLC, a national medical records firm.

  • The company filed for bankruptcy Friday after the break-in at its San Diego headquarters led to the electronic escape of detailed medical information for roughly 14,000 people, according to papers filed in U.S. Bankruptcy Court in Wilmington, Del.
  • “The cost of dealing with the breach was prohibitive” for the company, Impairment Resources said when explaining its decision to file for Chapter 7 bankruptcy protection.
  • The company said its assets are worth about $226,000, an amount that, even after money trickles in from liquidating sales, likely won’t be enough to pay lender Insurance Recovery Group and its $583,000 loan, Impairment Resources said in court papers.
  • The company also faced the threat of even more debt with customers and individuals threatening to sue it over the privacy breach.
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