Ebix’s proposed DIP financing package draws objection from committee

By Sarah Lizee

Olympia, Wash., Jan. 23 – Ebix, Inc.’s proposed debtor-in-possession financing package with existing lenders drew an objection from the official committee of unsecured creditors, according to documents filed Monday with the U.S. Bankruptcy Court for the Northern District of Texas.

As previously reported, the financing is set to consist of $35 million in new money and a $70 million rollup of prepetition credit facility debt.

The committee took issue with a long list of the DIP’s terms, calling the financing “overreaching and excessive” under the circumstances of the case.

The group said the DIP lenders are attempting to transfer the cost of the case to unsecured creditors by charging the 2:1 rollup of prebankruptcy debt “as compensation” for the proposed financing and converting $70 million of prepetition debt into a super-priority administrative expense to the detriment of unsecured creditors and even if no diminution of value occurs.

The rollup is also irreversible and not dependent on amounts drawn. If the debtors only draw $15 million, the rolled-up debt is still $70 million, resulting in a 4.7:1 roll up, which is well above market here, the committee noted.

The committee also took issue with the liens on unencumbered assets, including commercial torts, tax entitlements/refunds and avoidance actions.

The group said the financing would allow the DIP lenders to exert unnecessary and unwarranted control over the debtors, the reorganization process, and the cases to the detriment of all other stakeholders.

As a reminder, Regions Bank is the administrative and collateral agent.

The DIP facility is set to mature in 240 days and bears interest at SOFR plus 1,000 basis points.

There is a 3% upfront fee and a 2% exit fee.

Ebix is a Johns Creek, Ga.-based international supplier of on-demand software and e-commerce services to the insurance, financial, health care and e-learning industries. The company filed bankruptcy on Dec. 17 under Chapter 11 case number 23-80004.

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