Next Steps in Your Avaya Chapter 11 Journey

As summarized in yesterday's No Jitter post, "Avaya Takes a Step, Not a Leap," Avaya submitted its debt restructuring plan and related disclosure statement on April 13 -- just shy of three months since filing for Chapter 11 -- with a stated goal of emerging from bankruptcy as early as this summer.

The filings outline a path for reducing the pre-filing debt load by $4 billion -- a reduction that would improve the company's financial flexibility and position it for long-term success, Avaya has stated. In the filing, Avaya also specified a debt-for-equity exchange with certain secured creditors. Unsecured creditors will share pro rata in a cash pool.

Earlier last week, on April 11, Avaya filed an exclusive delay motion, requesting an extension of its exclusive right to file a plan of reorganization within 120 days beyond May 19, or approximately Sept. 16. It did so with the intent of retaining Avaya's right to control the restructuring process.

Recap on Announcements Since Chapter 11 Filing

As I shared a few weeks back during the Enterprise Connect 2017 session, "Avaya Update: What Enterprises Need to Know Right Now," Avaya has repeatedly stated that it anticipates a positive outcome from the Chapter 11 process. For example, Avaya has said it:

  • Plans to continue operating business as usual
  • Expects to emerge as a stronger, healthier company
  • Is keenly focused on minimizing disruption to customers, partners, and employees
  • Has no planned discontinuation of any products or services as a result of the filing
  • Has no planned changes to customer, distributor, or partner programs

Other events since the Jan. 19 Chapter 11 filing include:

  • Availability of debtor-in-possession (DIP) financing -- Avaya is able to draw on $725 million DIP financing, which it has said will provide more than adequate liquidity to support ongoing business operations during Chapter 11
  • Company wages approval -- On March 20, the Chapter 11 judge approved the company's wages motion, authorizing payment of wages, salaries, commissions, and reimbursable expenses in the ordinary course of business; continuation of employee benefits programs; and resumption of incentive programs. (The court had previously approved the motion as to certain wages, salaries, and benefits on an interim basis.)
  • Planned sale of Avaya's networking business -- The next scheduled court date is mid-April (as I write this), with the transaction expected to conclude by June 30, which is the close of Avaya's fiscal third-quarter 2017)

As it works through the bankruptcy process, Avaya continues to invest in product development, a positive sign. As an example, here are several key announcements from the company's mid-February Avaya Engage conference:

  • Cloud -- Zang Office, Zang Spaces, Avaya Spoken, virtual cloud contact center on demand
  • Security -- Surge IoT
  • Partners -- Salesforce, HP, Amazon Web Services, Oracle, Arrow SI

As I see it, here is the timeline of events that have and will take place:

Continue to Page 2 for cautionary notes