XBP Global Holdings, Inc. Fair Value Disclosure
17. Fair Value Measurement
Assets and Liabilities Measured at Fair Value
The carrying amount of assets and liabilities including current portion of other debt approximated their fair value as of December 31, 2025 and 2024, due to the relatively short maturity of these instruments. Management estimated the fair values of the Successor’s July 2030 Notes at approximately 87.9% of the principal balance outstanding as of December 31, 2025 (Successor). Management had estimated the fair values of the Predecessor’s July 2026 Notes and the April 2026 Notes at approximately 20.0% and 15.0%, respectively, of the respective principal balance outstanding as of December 31, 2024 (Predecessor). During the Chapter 11 Cases, the July 2026 Notes and the April 2026 Notes were classified as liabilities subject to compromise on the consolidated and combined balance sheet of the Predecessor and were discharged on July 29, 2025 on issuance of Common Stock of the Company as discussed under Note 4, Fresh Start Accounting. The fair values of secured borrowings under the BR Exar AR Facility, the Second Lien Note, the Super Senior Term Loan, the ABL Facility, the 2028 Term Loan Facilities and the Revolving Credit Facility are equal to their respective carrying values. Other debt represents the Company’s outstanding loan balances associated with various hardware, software purchases, maintenance and leasehold improvements along with other loans entered into by subsidiaries of the Company and as such, the cost incurred would approximate fair value. Property and equipment,
intangible assets, capital lease obligations, and goodwill are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the respective asset is written down to its fair value.
The Company determined the fair value of its long-term debt and current portion of long-term debt using Level 2 inputs, including any recent issuance of the debt, the Company’s credit rating, and the current market rate.
The Company determined the fair value of Private Warrants liability of the Company included in the other long-term liabilities in the consolidated balance sheet as of December 31, 2025 under Level 3 fair value measurement using the Black-Scholes option pricing model.
The following table provides the carrying amounts and estimated fair values of the Company’s financial instruments as of December 31, 2025 (Successor) and December 31, 2024 (Predecessor):
Successor | |||||||||||||||
Consolidated | |||||||||||||||
Carrying | Fair | Fair Value Measurements | |||||||||||||
As of December 31, 2025 | | Amount | | Value | | Level 1 | | Level 2 | | Level 3 | |||||
Long-term debt | $ | 353,267 | $ | 330,699 | $ | — | $ | 330,699 | $ | — | |||||
Current portion of long-term debts | 34,334 | 34,334 | — | 34,334 | — | ||||||||||
Private Warrants liability | 3 | 3 | — | — | 3 | ||||||||||
Predecessor | |||||||||||||||
Combined and Consolidated | |||||||||||||||
| Carrying | Fair | | Fair Value Measurements | |||||||||||
As of December 31, 2024 | | Amount | | Value | | Level 1 | | Level 2 | | Level 3 | |||||
Long-term debt | $ | 1,468 | $ | 1,468 | $ | — | $ | 1,468 | $ | — | |||||
Current portion of long-term debts | 1,433,484 | 267,781 | — | 267,781 | — | ||||||||||
The significant unobservable inputs used in the fair value of the Private Warrants liability of the Company are assumptions related to the inputs of exercise price, fair value of the underlying Common Stock, risk-free interest rate, expected term, expected volatility, and expected dividend yield. Significant increases (decreases) in the discount rate would have resulted in a lower (higher) fair value measurement. Significant increases (decreases) in the forecasted financial information would have resulted in a higher (lower) fair value measurement. For all significant unobservable inputs used in the fair value measurement of the Level 3 liabilities, a change in one of the inputs would not necessarily result in a directionally similar change in the fair value.
The following table reconciles the beginning and ending balances of net assets and liabilities classified as Level 3 for which a reconciliation is required:
Successor | |||
Consolidated | |||
Period from August 1, 2025 through | |||
| 2025 | ||
Balance as at August 1, 2025 | $ | 9 | |
(6) | |||
Balance as at December 31, 2025 |
| 3 | |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 19, 2025 | |
| 2023 | Apr 1, 2024 | |
| 2022 | Mar 29, 2023 | |
| 2021 | Mar 31, 2022 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.