Avaya Bankruptcy: Firm Gets Green Light For Financial Restructuring
The struggling UC giant, which filed for bankruptcy in February, has been granted court approval to being its financial restructuring plan with the goal of regaining the financial flexibility needed to heavily invest in its UCaaS portfolio, Avaya said on Wednesday.
Avaya Holdings Corp. on Wednesday received court approval of its financial restructuring plan, the company said in a statement.
The struggling unified communications giant can now begin its prepackaged restructuring plan on an accelerated basis, which includes reducing Avaya’s total debt by more than 75 percent and increasing its liquidity position to more than $650 million. The goal of the restructuring is to get the company to a place of financial flexibility so it can boost investment in its cloud-based communications portfolio, especially across its customer experience offerings, to position Avaya for long-term success, the company said.
Avaya’s current CEO Alan Masarek, who joined the company in August, will continue to lead Avaya when it emerges from bankruptcy.
“We embarked on this process with a clear goal – to create a stronger financial foundation that enables us to build on our competitive industry position, strengthen our partner ecosystem and better meet the needs of our customers with further investment in our cutting-edge, long-range product roadmaps,” Masarek said in a statement. “I am pleased with our progress as we prepare to complete this critical step of our business model transformation, and I am grateful for the confidence of our customers, partners, team members and investors along the way.”
Avaya, which recently changed its headquarters to Morristown, N.J., filed for Chapter 11 bankruptcy protection in federal court in Texas in February. The filing followed months of speculation of a bankruptcy declaration after the company’s 2022 cloud subscription accounting problems led to substantial earnings and revenue target misses.
[Related: Avaya Bankruptcy Filing: 5 Things To Know ]
The company said that its subsidiaries outside of the U.S. are not included in its financial restructuring process. It also has no impact on Avaya’s stakeholders, including customers, channel and strategic partners, suppliers, vendors and employees. Vendors and suppliers are being paid in full in the normal course of business, regardless of when goods or services were delivered, Avaya added.
“We are operating normally and continuing to serve the Avaya ecosystem with outstanding communications solutions, service and support,” Avaya said in a statement on the reorganization. “The court’s confirmation of our plan marks the last major milestone of our financial restructuring, and we expect to formally emerge from this process in the coming weeks.”
In its bankruptcy court filing in February, Avaya lists total assets of between $1 billion and $10 billion and total liabilities of between $1 billion and $10 billion. The company lists its number of creditors as being between 25,001 and 50,000.
Avaya in the court filing listed its creditors with the largest unsecured claims, which included Verint Americas in the amount of $22.93 million; Microsoft for $9.01 million; Wistron Corp. for $8.9 million; and solution provider giant SHI International for $7.71 million.