US firm that vetted Edward Snowden files for bankruptcy

Former US National Security Agency contractor Edward Snowden appearing live via video during a student-organized world affairs conference at the Upper Canada College private high school in Toronto, on Feb 2, 2015. -- PHOTO: REUTERS
Former US National Security Agency contractor Edward Snowden appearing live via video during a student-organized world affairs conference at the Upper Canada College private high school in Toronto, on Feb 2, 2015. -- PHOTO: REUTERS

BENGALORE (Reuters) - Altegrity Inc, owner of the company that carried out background checks on former NSA contractor Edward Snowden and Navy Yard shooter Aaron Alexis, filed for Chapter 11 bankruptcy protection on Sunday as it implements a restructuring deal with its lenders.

Altegrity, which owns USIS Investigations Services, listed assets and liabilities of more than US$1 billion (S$1.25 billion), according to court documents.

USIS's botching of the Snowden background checks had led the federal government to reduce its work with the company, the Wall Street Journal reported last year.

National Security Agency contractor Snowden revealed to the media in June 2013 that US spy agencies had planted code in American-made software to snoop on overseas targets, in what officials have said is the most damaging leak in US history.

Alexis was a defence contractor who had just obtained security clearance when he opened fire on civilian workers inside a restricted military installation in Washington on Sept 16, 2013, killing 12 people. He was shot and killed by police. Federal Bureau of Investigation (FBI) later said Alexis' medical history shows he believed he was being controlled or influenced by extremely low-frequency (ELF) electromagnetic waves.

The company said some of its lenders, including funds managed by Third Avenue Management, Litespeed Management LLC and Mudrick Capital Management LP, have committed to provide US$90 million in debtor-in-possession financing.

Last week, Altegrity said it finalised the terms of a restructuring support agreement with holders of more than US$1.3 billion of secured debt and expected to file for bankruptcy protection as part of the restructuring.

A majority of its lenders are backing a restructuring support agreement. The restructuring and the proceeds from the previously disclosed sale of its two businesses are expected to reduce Altegrity's debt by about US$700 million, or 40 percent, the company said.

Operations at its HireRight and Kroll units will continue without interruption throughout the process, Falls Church, Virginia-based Altegrity said in a statement.

HireRight focuses on private-sector employers and provides employee background checks, while Kroll provides risk and information management services.

Altegrity reported a cyberattack at USIS last August that exposed highly personal employee information at the Department of Homeland Security's headquarters, as well as its US Immigration and Customs Enforcement and US Customs and Border Protection units.

The company's bankruptcy case is in the United States Bankruptcy Court for the District of Delaware, case no: 15-10226.