Mobile Phone Repair Giant Bankrupt After Ransomware Attack, Sells HQ and Cuts Staff to Eight.

CNBC AI News, August 3rd – Einhaus Group, a prominent German mobile phone repair and insurance firm once boasting a network of 5,000 retail partners across Germany and annual revenues of €70 million (approximately $76 million USD), has reportedly succumbed to the devastating consequences of a ransomware attack, ultimately leading to its bankruptcy.

In March 2023, the notorious “Royal” hacking group targeted Einhaus Group, encrypting mission-critical systems and demanding a ransom of approximately $230,000 in Bitcoin.

Wilhelm Einhaus, the company’s founder, recounted the chilling scene of arriving at the office to find printers spewing out the hackers’ ransom demands: “We hacked you.”

The system shutdown brought Einhaus Group’s operations to a grinding halt. The estimated losses caused by the cyberattack amounted to millions of euros, ultimately compelling the company to pay the ransom, sources familiar with the matter stated.

The financial repercussions from the business disruption and the ransom payment forced Einhaus Group into a desperate fight for survival.

Sources revealed a dramatic downsizing, slashing the workforce from 170 employees to a skeleton crew of just eight. In a bid to stay afloat, the company even sold its headquarters building in mid-2024 and liquidated some capital investments.

While German law enforcement apprehended three suspects and seized some cryptocurrency assets, the funds have not been returned to Einhaus Group pending the completion of the investigation. The company’s hope of recovering the ransom appears dim.

Now, three affiliated companies within the Group have formally entered bankruptcy proceedings, with liquidation looming as the next potential step.

Despite the company’s plight, founder Wilhelm Einhaus, 72, remains resolute. He insists that even if the worst-case scenario unfolds, he has no intention of retiring but rather plans to start anew, displaying a striking resilience in the face of adversity.

This incident echoes the recent collapse of a 158-year-old British transport firm, also felled by a ransomware attack that resulted in 700 job losses, underscoring the potentially catastrophic impact of such cyberattacks on businesses of all sizes.