Ebix Inc files for Chapter 11 bankruptcy; sells North America insurance biz to raise fund
Ebix, Inc. (NASDAQ: EBIX), a leading provider of on-demand software and e-commerce services for insurance, finance, and travel industries, has filed for Chapter 11 bankruptcy protection in the United States. The Chapter 11 filing provides Ebix with breathing room to address the upcoming maturity of its credit facility and restructure its debt obligations.
However, the company has said that Ebix’s international subsidiaries and franchisees located outside the United States remain unaffected by the Chapter 11 filing and will continue their operations as usual.
Robin Raina-promoted company also announced the sale of its North American Life and Annuity assets (NA L&A Assets) to Zinnia, a prominent Eldridge business specializing in life insurance and annuity technology. The sale of the NA L&A Assets, comprising roughly 15% of Ebix’s global revenues, significantly reduces the company’s debt burden and streamlines its operations.
The company in a statement issued on 18 December 2023 said that despite the restructuring, Ebix remains optimistic about its future, confident in its strong fundamentals, robust business model, and continued generation of healthy cash flow across its global operations. The company emphasizes its intention to maximize value through the NA L&A Assets sale and emerge from Chapter 11 as a leaner, more focused entity poised for growth.
It said that debtor-in-possession financing secured by Ebix ensures uninterrupted business operations and protects the interests of customers, vendors, and partners throughout the restructuring process.
Its India subsidiary, Ebix India, represents a significant player in the Indian technology and financial services landscape. With a diverse portfolio of solutions and an extensive network, the company is well-positioned to capitalize on the growing demand for digital offerings in various sectors. It has 200+ offices across India, spread across different states and major cities, 650,000+ physical distribution outlets in India and Southeast Asian countries and 17,900+ registered corporate clients for travel services.
It must be noted that short-seller Hindenburg Research in a report published in 2022 had said that IPO of its 100% India subsidiary EbixCash would be flop as ‘we think a substantial portion of EbixCash’s gift card revenue is non-existent.
It had also predicted that given Ebix’s massive near-term debt load in a rising rate environment, we see significant solvency risk over the next 12 months.
Also Read: NCLT approves Ebix’s Rs 325-crore resolution plan for Educomp Solutions
