XBP Global Holdings, Inc. Commitments Disclosure

16.     Commitments and Contingencies

Litigation

The Company is, from time to time, involved in certain legal proceedings, inquiries, claims and disputes, which arise in the ordinary course of business. Although management cannot predict the outcomes of these matters, management does not believe any of these actions that are currently pending will have a material, adverse effect on the Company’s consolidated and combined balance sheets, consolidated and combined statements of operations or consolidated and combined statements of cash flows.

Business Interruption Insurance Claim

During the second half of 2022, certain subsidiaries of the Company experienced a network security incident (the “2022 Network Outage”) impacting certain of such subsidiaries operational and information technology systems. As a result of the 2022 Network Outage, such subsidiaries of the Company experienced lost revenue and incurred certain incremental costs. The Company had reduced its revenue for 2022 by the estimated settlement amount of the incident-related customer claims and recorded an accrued liability for the claims payable to customers. A total of $0 and $1.9 million that may be payable to customers to settle customer claims are recorded as customer payables in accrued liabilities on its consolidated and combined balance sheets as of December 31, 2025 (Successor) and December 31, 2024 (Predecessor), respectively.

On August 29, 2023, the Company submitted a claim to its insurers for $44.6 million in covered losses related to the 2022 Network Outage (the “August 2023 Claim”). During the year 2023, the Company received insurance proceeds of $10.8 million in respect of business interruption claims from its underlying and first excess carriers. On April 17, 2024, the Company commenced an action (the “Insurance Lawsuit”) against two excess-layer insurers (collectively, the “Second Excess Insurers”) seeking a declaratory judgment and alleging breach of contract and bad faith for failing to pay out their share of losses connected to the August 2023 Claim. On August 9, 2024, the Company settled its claim against one of the Second Excess Insurers for $3.6 million, and on October 15, 2024, the Company settled its claim against the other Second Excess Insurers for $3.6 million (less amounts already paid). On October 8, 2024, the Company moved to amend the complaint (the “Amended Complaint”) to add two additional excess-layer insurers to the Insurance Lawsuit (collectively, the “Third Excess Insurers”). The Amended Complaint was filed on October 24, 2024. On December 2, 2025, the Company settled its claim against the Third Excess Insurers for $5.3 million. With execution of these insurance settlements and the reassessment of outstanding customer claims, the Company has concluded all insurance and customer claim matters relating to the 2022 Network Outage. The Company does not believe that any additional losses related to the 2022 Network Outage are probable, nor does the Company expect further material costs, customer claims, or insurance recoveries.

Company Subsidiary Litigation

A group of 71 former employees brought a claim against a subsidiary of the Company related to their dismissal resulting from the closure of two production sites in France in 2020. The employees filed complaints with the French Labor Court on June 9, 2022. Various hearings were held. In March 2023, 67 claimants (4 had previously settled) applied for summary judgment which was granted for $1.1 million and was paid by the Company. In addition, settlement agreements were reached with 56 claimants for $1.8 million in 2024. A further settlement with the 15 remaining claimants was reached for $0.8 million in 2025. On November 7, 2025, settlements with all claimants were signed. All settlement amounts under these settlement agreements have been paid as of December 31, 2025.

Contract Claim

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On October 24, 2018, HOV Services, Inc., a subsidiary of the Predecessor (“HOV Services”), filed a lawsuit against ASG Technologies Group, Inc. (“ASG”) that sought to terminate the renewal of licensing agreement between the parties. HOV Services alleged that the licensing agreement was renewed under duress and brought claims against ASG under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq., the Stored Communications Act, 18 U.S.C. § 2701 et seq., and various common law doctrines. ASG subsequently brought counterclaims asserting breach of contract and other allegations. On February 27, 2024, a judge granted ASG’s motion for directed verdict on its breach of contract claim and awarded ASG $2.5 million in damages plus interest. On February 29, 2024, the jury found in favor of ASG on all remaining claims and awarded ASG damages in the amount of approximately $0.7 million plus interest, for a total award of approximately $4.7 million in the case. On December 31, 2024, the parties entered into a settlement agreement under which the Predecessor agreed to pay a total of $5.1 million over three (3) equal installments starting in January 2025 to fully resolve the matter. As of December 31, 2024 (Predecessor), the Predecessor had accrued $5.1 million for this matter included in accrued liabilities on the consolidated and combined balance sheet. On January 3, 2025, the Predecessor paid the first installment of $1.7 million. The remaining installments were included in the Restructuring related settlements and will be satisfied in accordance with the Plan.

Contract-Related Contingencies

The Company has certain contingent obligations that arise in the ordinary course of providing services to its clients. These contingencies are generally the result of contracts that require the Company to comply with certain performance measurements or the delivery of certain services to clients by a specified deadline. The Company believes the adjustments to the transaction price, if any, under these contract provisions will not result in a significant revenue reversal or have a material adverse effect on the Company’s consolidated and combined balance sheets, consolidated and combined statements of operations, consolidated and combined statements of comprehensive loss or consolidated and combined statements of cash flows.