Ask zipinfo for the filename listed in the zip file, then capture it for the password. Use that password to unzip the file:

pw=$(zipinfo -1 file1.zip | cut -d. -f1)
unzip -P "$pw" file1.zip

Note that the flag to zipinfo is a one not an ell.

Ask zipinfo for the filename listed in the zip file, then capture it for the password. Use that password to unzip the file:

pw=$(zipinfo -1 file1.zip | cut -d. -f1)
unzip -P "$pw" file1.zip

Note that the flag to zipinfo is a one not an ell.

Borrowing liberally from Gilles' answer to a similar question, here's a bash loop that will extract a password-protected nested zip file until there are no more zip files:

shopt -s nullglob
while set -- *.zip; [ $# -eq 1 ]
do 
  unzippw "$1" && rm -- "$1"
done

Where I've defined the function unzippw as a wrapper for the zipinfo and unzip commands above:

unzippw ()
{
    local pw=$(zipinfo -1 "$1" | cut -d. -f1)
    unzip -P "$pw" "$1"
}