E-commerce provider files for bankruptcy after hacking breach

Austin-based Volusion LLC has filed for Chapter 11 bankruptcy in the Southern District of Texas. Volusion is a provider of cloud-hosted online stores for small and medium-sized businesses. However, in late 2019, hackers compromised the Google cloud infrastructure of the company and stole 239,000 credit card records. The hackers sold the stolen credit cards for at least $1.6 million.



Volusion was founded by Kevin Sproles in 1999 when he was 16 years old. He returned to the company in 2015 as CEO, though he stepped down from that role in August 2019, shortly before the breach took place.

Mr Sproles still owns 88% of the equity. Main Street Capital, a Houston-based public company, owns 8% of the equity, which they valued at $12.95 million in their most recent annual report. Main Street also has a further $19.2 million in secured debt and $0.3 million in unsecured debt invested in the company.  The other 4% of the equity is owned by another Houston company, HMS Equity Holdings, which also has secured debt outstanding.

According to a research report by Gemini, the hackers inserted malicious JavaScript code onto the company’s servers. This was then loaded onto at least 6,589 online stores of customers of Volusion. The malicious code recorded payment card details as it was being entered onto checkout forms. The breach occurred on September 7, 2019 and was discovered on October 8. The stolen card data was put up for sale on the dark web in November.

Tim Stallkamp of Conway MacKenzie has been appointed Chief Restructuring Officer of the company.

Volusion llc Chapter 11

 

 

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