Cambridge Analytica, the firm at the centre of this year's Facebook data scandal, files for voluntary Chapter 7 bankruptcy in a New York court late on Thursday
New York: Cambridge Analytica, overwhelmed by a scandal over how it harvested data from Facebook to influence the last US election, filed for bankruptcy in New York.
The UK-based political consulting firm, which had already said it would cease operations and wind down in its home country, listed liabilities of $1 million to $10 million. The Chapter 7 petition to liquidate US affiliates — including SCL Elections Ltd., and SCL USA Inc. and SCL Social Ltd. — was signed by board members Rebekah Mercer and Jennifer Mercer, daughters of former New York hedge fund manager Robert Mercer whose family backed Donald Trump presidential campaign and helped reshape American conservative politics.
The American bankruptcy case could shed light on some of the company’s relationships and finances, as US legal proceedings are more transparent than those in the UK, and creditors can use bankruptcy law to subpoena information and probe asset transfers. Cambridge Analytica, which did work for Trump’s 2016 campaign, said in a 2 May statement on its website that it lost “virtually all" customers and suppliers as a result of reports that it improperly obtained information from tens of millions of Facebook Inc. users.
The company listed creditors including units of BlackBerry Ltd., Oracle Corp. and Comcast Corp. as well as the Federal Election Commission, the US Securities and Exchange Commission and offices of the attorneys general in Connecticut, New Jersey and Massachusetts.
Robert Mercer, who made his fortune as co-CEO of Renaissance Technologies, has been a financial backer of Cambridge Analytica, along with Steve Bannon and Breitbart News.
Emerdata Ltd., a London-based company formed in 2017, is listed as a direct owner of 89.5% of Cambridge Analytica LLC. Nigel Oakes, the founder of Cambridge Analytica’s British affiliate, SCL Group, said earlier this month that Emerdata is also under court administration, refuting speculation that the consulting firm’s operations would live on through new entities.
A whistle-blower from Cambridge Analytica set off a firestorm in March after he revealed how information was extracted from Facebook and used to influence voters. He testified before a UK parliamentary committee, describing the firm as one that dealt with illegal data and hacked material to win elections. He said Trump’s victory was one of the reasons he blew the whistle. House Democrats who met with him in April called his information “disturbing."
Cambridge Analytica faces lawsuits in the US over the Facebook data collection. One, for example, seeks class action status on behalf of all New York citizens who were Facebook members and whose information was obtained. They say they face ongoing damages because their private data is in the hands of the company.
Facebook also has been sued dozens of times itself over the data breach, and if it loses suits, could be expected to turn to Cambridge Analytica for damages.
Cambridge Analytica said in its 2 May statement that it has “been the subject of numerous unfounded accusations" and that it has been vilified for activities that are not only legal, “but also widely accepted as a standard component of online advertising."
In March, footage emerged of the company’s executives bragging about how prostitutes and former spies could be used to ensnare politicians and influence elections. One segment showed chief executive officer Alexander Nix saying that Ukrainian girls “are very beautiful, I find that works very well." Nix in a BBC interview later said the allegations were “unfounded and extremely unfair."
Schulte Roth & Zabel LLP is listed as bankruptcy counsel.
The case is Cambridge Analytica LLC, 18-11500, US Bankruptcy Court, Southern District of New York (Manhattan.)
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