I can't quite express the difficulty I'm having in a comment so I'll try to write it up some time.
I can't argue it yet, but my intuitive feeling is that it's socially irresponsible to create this economy for them and then pull the plug like this. The bigger picture, I think, is that OP got his code stolen which sucks, but the contractor (or one like him) may have to sell a kidney or go back to working 18 hour shifts in the factory with toxic fumes now. That doesn't seem proportionate.