DocuData Solutions: Exela's $1.1B Debt Swap in 112 Days

DocuData Solutions, L.C. and 59 affiliated subsidiaries of publicly traded Exela Technologies, Inc. filed prearranged chapter 11 petitions in March 2025, seeking to eliminate over $1.1 billion in funded debt accumulated through a 2017 SPAC merger that created a business process automation company in the United States. The restructuring addressed post-pandemic revenue decline, two ransomware attacks, and funded debt of about $1.315 billion by converting approximately $1.252 billion in secured notes to equity, and it was followed by the acquisition by XBP Europe Holdings, Inc. The case confirmed in approximately 112 days.

The Exela bankruptcy reflects the intersection of cybersecurity incidents, digital transformation, and a leveraged capital structure. The company's core document processing business faced pressure as customers accelerated their shift to digital solutions during the COVID-19 pandemic, reducing demand for the physical mail processing services that formed the backbone of Exela's revenue. Two ransomware attacks—by the Hive group in 2022 and Hunters International in 2024—contributed to business disruption, customer attrition, and remediation costs.

Exela Technologies: Business Process Automation Company

Exela Technologies, Inc. operates as a global business process automation company, providing digital transformation solutions across multiple industries including banking, healthcare, insurance, and manufacturing. The company was created through the July 2017 merger of SourceHOV Holdings, Inc.—a global transaction processing company—and Novitex Holdings, Inc.—a cloud-based document outsourcing and onsite staffing company—with SPAC Quinpario Acquisition Corp. 2. Apollo Global Management and HGM (HandsOn Global Management) served as private equity sponsors in the transaction.

Following the merger, the combined entity was renamed Exela Technologies, Inc. and began trading on NASDAQ under the ticker symbol "XELA" on July 13, 2017. The transaction created an enterprise comprising approximately 134 entities, with the 60 debtor entities representing the operating subsidiaries while the publicly traded parent remained a non-debtor.

Global operations. At the time of filing, the company maintained headquarters in Irving, Texas, with management also based in Troy, Michigan, and Santa Monica, California. Operations spanned 23 countries across six continents, with approximately 11,000 employees globally—of which roughly 4,700 were employed by the debtor entities. The workforce distribution included approximately 4,139 employees in the United States, 282 in Canada, and 241 in Mexico, with additional operations in India and the Philippines supporting global delivery.

Customer base. Exela served over 4,000 customers, including more than 60% of Fortune 100 companies. The company's client roster included global banks and financial institutions, healthcare payers and providers, and other enterprises requiring document processing and transaction management services.

Business Segments and Revenue Composition.

The company operated through three primary business segments, each serving distinct market needs and contributing differently to overall revenue performance.

ITPS segment. The Information and Transaction Processing Solutions segment represented the company's core business, providing document processing, digital mailroom solutions, and payment technologies to customers primarily in financial services, commercial, and public sectors. This segment included the XBP platform—an exchange for bills and payments enabling billers, consumers, and businesses to communicate and transact without significant capital investment. The segment also encompassed Procure-to-Pay (P2P) and Order-to-Cash (O2C) solution suites that automated procurement and customer order fulfillment processes.

Healthcare Solutions segment. The Healthcare Solutions segment served healthcare payers and providers with revenue cycle management, claims processing, and payment optimization services. The company's PCH Global cloud-based claims processing platform processed approximately 900,000 claims daily and handled claims submission and payment processes for healthcare providers and payers.

Legal and Loss Prevention segment. The smallest segment provided specialized services for legal proceedings, including class action settlement administration, claims adjudication, subpoena compliance, and asset recovery services.

Technology Platform and Competitive Position.

The company developed proprietary technology platforms for its services. Key offerings included EON, a robotic process automation solution using task-specific bots for repetitive, rule-based assignments. ExelaBEATS provided collaborative project management software enabling working groups to manage workflow and collaborate in real time. DrySign offered a digital signature platform to digitize internal and external sign-off processes.

Despite these technology investments, the company operated in a competitive, fragmented industry. Competitors included national, regional, and large multinational companies within the broader information and payment technology sector, as well as players from adjacent industries or geographic locations with lower operating costs. The company faced pricing challenges and market share erosion during the pandemic period.

Revenue Trajectory and Decline.

The company experienced sustained revenue decline following the COVID-19 pandemic, as accelerated digital transformation reduced demand for physical document processing services.

Revenue declined approximately 47% from the 2019 peak of $1.6 billion to $856 million in 2024, with pandemic-related disruptions and changes in customer demand for document processing services. The shift to digital communications during the pandemic reduced demand for physical document processing services.

Pre-Filing Distress and Contributing Factors

Multiple factors contributed to the financial distress preceding the chapter 11 filing. The First Day Declaration filed by Chief Restructuring Officer Randall S. Eisenberg of AlixPartners identified several specific causes.

Decline of the Novitex Business.

The company's financial challenges began shortly after the 2017 SPAC transaction closed. The debt structure implemented to facilitate the merger required sustained performance levels to service, but the Novitex business exhibited lower customer retention rates than originally anticipated. The strategic rationale for the merger—deploying SourceHOV's technology to expand Novitex's service offerings and strengthen customer relationships—did not materialize. The resulting revenue unpredictability adversely affected the enterprise and contributed to accumulating debt service challenges.

Credit Ratings Downgrade.

In 2019, both Moody's and Standard & Poor's downgraded the debt ratings for Exela Intermediate and Exela Finance. The downgrades had cascading effects: the parent company's share value declined, limiting its ability to use equity for financing purposes. New debt financing became more expensive and complex to secure. Suppliers began imposing more onerous terms, and customers in some cases withheld work mandates due to concerns about the company's financial stability.

COVID-19 Pandemic Impact.

The COVID-19 pandemic disrupted operations. The company had to transition much of its approximately 22,000-person workforce to remote work in a short period. While many of the company's solutions and services were deemed essential in the United States, allowing employees to continue working at company facilities, the operational complexity and associated costs increased.

The healthcare segment faced particular challenges as healthcare payers and providers suspended certain services—including dental procedures, elective surgeries, and similar categories—reducing claims volumes for approximately two years. The pandemic accelerated digital transformation among customers, which reduced demand for Exela's core physical document processing services even after pandemic restrictions ended.

Ransomware Attacks and Cybersecurity Incidents.

Two ransomware attacks contributed to the company's distress, causing business disruption, customer attrition, and remediation costs.

Hive ransomware attack (June 2022). In late June 2022, the company experienced a network security incident affecting certain parts of its operational and IT systems. Unauthorized access was initially detected on June 19, 2022, with the breach attributed to the Hive ransomware group. The company isolated affected systems by taking large portions of its network offline as a precaution, which disrupted services to certain customers. The incident affected a business that handles sensitive data for legal, government, and healthcare clients. The parent company filed a business interruption claim against insurers for $44.7 million, of which approximately $20 million remained unpaid at the time of the bankruptcy filing.

Downstream client impact. In February 2024, Aflac sued Exela for nearly $900,000 in alleged losses stemming from the ransomware attack, which temporarily disrupted Aflac's claims processing capabilities. Aflac subsequently reported that 22.6 million people were affected by the cyber incident.

Hunters International attack (2024). In early April 2024, another third party posted Exela information online, believed to be the Hunters International ransomware group. This second attack further disrupted operations and required additional remediation expenses. The company acknowledged that remediation efforts continued into 2024 and maintained a $35 million contract for breach notification and mitigation services.

Unsustainable Debt Load.

The combination of declining revenue, credit rating downgrades, pandemic disruption, and cyberattack costs left the company unable to service its approximately $1.315 billion in funded debt. The April 2026 Notes maturity created near-term refinancing needs.

Capital Structure at Filing

The debtors entered bankruptcy with approximately $1.315 billion in funded debt, concentrated primarily in secured notes maturing in April 2026.

Blue Torch Term Loan. On July 11, 2023, Exela Intermediate LLC and Exela Finance, Inc. entered into a $40 million senior secured term loan with Blue Torch Finance LLC and related lenders. As of the petition date, approximately $38.5 million remained outstanding. The facility held first-priority liens on substantially all personal property and fixtures of the borrowers and guarantors.

April 2026 Secured Notes. The April 2026 Notes were issued on July 11, 2023, pursuant to an indenture with U.S. Bank Trust Company, National Association, as trustee, and Wilmington Savings Fund Society, FSB, as collateral agent. The notes bore 11.5% interest with certain payments made in kind, causing the outstanding principal to grow from approximately $1.082 billion at issuance to $1.252 billion at the petition date. Certain non-debtor affiliates held approximately $384 million in principal amount of the April 2026 Notes—approximately 30.7% of the outstanding balance.

The April 2026 Notes resulted from the 2023 Exchange, which converted $956 million of the previously outstanding July 2026 Notes into the new secured notes. The exchange was followed by continued revenue decline and the cyberattack impacts. Additional April 2026 Notes were issued as consideration for private exchanges of certain term loans, exchanges of secured notes held by affiliates, and to certain non-debtor affiliates in satisfaction of prior cash payments made to or on behalf of the issuers.

July 2026 Unsecured Notes. Originally issued as secured obligations in December 2021, the July 2026 Notes were stripped of their collateral through a supplemental indenture executed in July 2023 as part of the 2023 Exchange. The supplemental indenture also eliminated substantially all restrictive covenants and certain events of default. Only approximately $24 million remained outstanding, with certain non-debtor affiliates holding a nominal amount.

Additional obligations. Beyond funded debt, the debtors carried tax liabilities including approximately $34.9 million in payroll tax obligations (including interest and penalties) and approximately $7.3 million in CARES Act deferred payroll taxes. Trade payables totaled approximately $41 million.

Receivables securitization facilities. The company maintained receivables financing arrangements totaling approximately $127 million, structured through special purpose vehicles. The PNC AR Facility provided up to $150 million through a securitization structure where certain debtor entities transferred receivables to non-debtor special purpose entities, which then obtained financing from PNC Bank. As of the petition date, approximately $94.3 million was outstanding under this facility. Additionally, a second lien note with B. Riley totaled approximately $22.6 million, and the BR Exar accounts receivable facility with a B. Riley affiliate had approximately $10 million outstanding. These facilities provided working capital liquidity that was maintained through the chapter 11 process.

Prearranged Restructuring Structure

The debtors entered chapter 11 with a fully negotiated restructuring framework supported by the majority of their secured bondholders, enabling confirmation and emergence.

Restructuring Support Agreement.

The Ad Hoc April 2026 Noteholder Group—holding approximately 73.7% of unaffiliated April 2026 Notes—agreed to support a prearranged chapter 11 plan prior to filing. With affiliated bondholders holding an additional 30.7%, total support exceeded 81.7% of the outstanding April 2026 Notes. The restructuring support agreement provided:

• Support for the prearranged chapter 11 plan
• Commitment to provide $80 million DIP financing
• Commitment to provide $245 million Exit Facility
• Milestones for plan confirmation

DIP Financing.

The Ad Hoc April 2026 Noteholder Group provided $80 million in new money DIP financing on a superpriority basis, secured by first-priority liens on DIP collateral, as outlined in the DIP Motion.

The DIP facility was structured to convert into exit financing upon emergence, providing liquidity through the confirmation process. This structure meant the same creditor group provided both DIP and exit financing.

Exit Facility.

Upon emergence, the DIP facility converted into a $245 million Exit Facility, comprising:

• $80 million (DIP rollover)
• $60 million in new money
• $105 million roll-up of April 2026 Note obligations
• Certain fees

The exit financing structure provided the reorganized debtors with liquidity to support ongoing operations following emergence.

Chapter 11 Plan: Treatment and Recoveries

The Confirmed Plan achieved over $1.1 billion in debt reduction, according to Cleary Gottlieb, through conversion of the April 2026 Secured Notes to 100% of reorganized equity.

Classification and Treatment.

Secured creditor treatment. The Blue Torch first-lien term loan was paid in full in cash at emergence, consistent with its priority position. The April 2026 Noteholders—holding second-priority liens on substantially all assets—received 100% of the reorganized equity in exchange for their approximately $1.252 billion in claims. This equitization eliminated the company's largest debt obligation and delivered ownership to the creditor group that also provided DIP and exit financing.

Unsecured creditor treatment. General unsecured creditors—including trade creditors, July 2026 Noteholders, and potential data breach claimants—shared in a negotiated settlement pool rather than receiving distributions based on strict priority.

UCC Settlement.

The Official Committee of Unsecured Creditors negotiated a settlement providing recovery for general unsecured creditors:

• Cash pool: $4.75 million for general unsecured creditors
• Distribution schedule: Payments over 27 months
• Interest: 4% PIK on deferred distributions
• Allocation: Pro rata to allowed general unsecured claims

The settlement was incorporated into the plan and provided distributions to general unsecured creditors.

U.S. Trustee Objection.

The U.S. Trustee objected to the plan's opt-out non-debtor releases, raising concerns about the scope of third-party releases included in the restructuring. The court overruled the objection, finding that the plan had creditor support and that creditor claim releases were voluntary. The Confirmation Order was entered on June 23, 2025, clearing the path for emergence.

Non-Debtor Parent Structure.

The restructuring excluded Exela Technologies, Inc.—the publicly traded parent—from the bankruptcy. The 60 operating subsidiaries filed chapter 11, but the parent company remained outside the proceedings. Under the plan, the parent's equity interests in the debtor subsidiaries were cancelled, effectively severing the relationship while allowing the business to continue under new ownership. This structure preserved the parent's legal existence while transferring the operating assets to the reorganized debtors.

Post-Emergence: XBP Global Acquisition

Following emergence from bankruptcy, XBP Europe Holdings, Inc. completed the acquisition of Exela Technologies BPA, LLC, consolidating the business process automation operations under new ownership and rebranding the combined company as XBP Global Holdings, Inc.

Combined company profile:

The acquisition followed emergence and rebranded the combined company as XBP Global Holdings, Inc. XBP Europe was itself a publicly traded subsidiary of Exela, trading on NASDAQ under the ticker "XBP."

Key Timeline

Professional Retentions

Frequently Asked Questions

What caused Exela's subsidiaries to file bankruptcy?

Three primary factors were cited for the chapter 11 filing. First, post-pandemic revenue decline reduced annual revenue from $1.182 billion in 2021 to $856 million in 2024 as digital transformation accelerated and demand for physical document processing services declined. Second, two ransomware attacks—by the Hive group in 2022 and Hunters International in 2024—caused business disruption, remediation costs, and customer attrition. Third, the company carried approximately $1.315 billion in funded debt with an April 2026 maturity wall.

How much debt was eliminated through the restructuring?

The plan achieved over $1.1 billion in debt reduction by converting approximately $1.252 billion in April 2026 Secured Notes into 100% of reorganized equity. The Blue Torch first-lien term loan of approximately $38.5 million was paid in full in cash.

Why wasn't the publicly traded parent company a debtor?

Exela Technologies, Inc. (NASDAQ: XELA) was structured as a non-debtor parent, with only the 60 operating subsidiaries filing bankruptcy. This structure allowed the restructuring to proceed while maintaining the parent's separate legal existence. Under the plan, the parent's equity interests in the debtor subsidiaries were cancelled, effectively transferring the operating business to new ownership through the chapter 11 process.

What recovery will unsecured creditors receive?

General unsecured creditors—including trade creditors, July 2026 Noteholders, and potential data breach claimants—share a $4.75 million cash pool distributed over 27 months with 4% PIK interest under the UCC Settlement. The plan provided a negotiated settlement rather than distributions based solely on strict priority.

Who controls the reorganized company?

The Ad Hoc April 2026 Noteholder Group, which provided DIP financing and committed to the Exit Facility, received 100% of reorganized equity. The group held approximately 73.7% of unaffiliated April 2026 Notes prior to filing, with affiliated bondholders holding an additional 30.7%.

What was the scale of the cyberattack impact?

The Hive ransomware attack in June 2022 compromised sensitive data for legal, government, and healthcare clients. Aflac reported that 22.6 million people were affected by the incident and sued Exela for nearly $900,000 in losses. The company filed a $44.7 million business interruption claim against insurers, of which approximately $20 million remained unpaid at filing.

How quickly did the case proceed?

The prearranged structure enabled confirmation in approximately 112 days—from the March 3, 2025 petition date to the June 23, 2025 confirmation order. The effective date occurred on July 29, 2025, with certain cases closed by final decree on September 30, 2025.

What happened to the business after emergence?

XBP Europe Holdings, Inc. completed the acquisition of Exela Technologies BPA, LLC following emergence. The combined company was renamed XBP Global Holdings, Inc. and generates over $900 million in annual revenue serving over 2,500 clients across 19 countries.

What were the key business segments?

Exela operated through three segments: Information and Transaction Processing Solutions (64% of 2024 revenue), providing document processing and payment technologies; Healthcare Solutions (27% of revenue), offering claims processing and revenue cycle management; and Legal and Loss Prevention Services (9% of revenue), providing class action administration and asset recovery services.

What was the origin of the company's debt burden?

The debt structure originated from the July 2017 SPAC merger combining SourceHOV, Novitex, and Quinpario Acquisition Corp. 2. The transaction was sponsored by Apollo Global Management and HGM. The Novitex business underperformed expectations following the merger, with lower customer retention than anticipated, preventing the combined company from servicing its debt obligations as planned.

Who is the claims agent for DocuData Solutions?

Kroll Restructuring Administration LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

---

For more bankruptcy case analyses and restructuring insights, visit the ElevenFlo bankruptcy blog.