This story was first published on the Benzinga India portal.

Under the helm of Robin Raina, Ebix Inc. (NASDAQ:EBIX) has declared bankruptcy in the U.S. amidst a towering debt exceeding $600 million. This development has thrown a shadow of uncertainty over the future of the company's Indian arm, EbixCash, a notable player in the fields of forex, gift cards, and payment services.

The financial turbulence of the NASDAQ-listed parent company originates from its failure to clear loans. The corporation had banked on resolving this issue by amassing ₹6,000 crore (approximately $806 million) through an initial public offering (IPO) of EbixCash. Despite securing the necessary regulatory green lights, the IPO has not yet come to fruition.

Three significant problems are indicated by the bankruptcy filing in a Texas court: a surge in interest expenses, a shift in auditing firm which negatively influenced investor sentiment, and a scathing report from Hindenburg Research that resulted in a substantial depreciation of market value. Collectively, these circumstances have crippled Ebix's ability to satisfy its creditors.

India-born American CEO Raina, who owns a 13.9% share in the firm, is the largest shareholder. The next largest shareholders are BlackRock Inc. (NYSE:BLK), The Vanguard Group, and Steven D. Lebowitz.

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EbixCash is licensed by the Reserve Bank of India (RBI) to offer various financial services like prepaid instruments and forex. If Ebix India violates authorization conditions, the RBI may take corrective action. Moreover, there could be insolvency proceedings under India's Insolvency and Bankruptcy Code (IBC) if Ebix India defaults on payments.

It's crucial to note that in bankruptcy cases, RBI licenses become null and void, particularly when dealing with third-party funds. Even though EbixCash is not mentioned in the U.S.-specific Chapter 11 filing, risk emerges when the parent company, the ultimate beneficiary, declares bankruptcy.

Ebix Inc.'s aggressive growth tactics have resulted in substantial debts, amassing to $639.3 million at the close of 2022. The firm had a deadline of December 17 to resolve its debts, beyond which it would face the prospect of bankruptcy proceedings.

Amid this financial turmoil, CEO Raina's remuneration, which includes a $1.8 million bonus, has sparked controversy, leading to queries about the company's financial management practices.