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Avaya Could Emerge From Bankruptcy By Summer

Avaya VP and corporate treasurer John Sullivan sounds bullish note as he announces plans to come out of Chapter 11 Bankruptcy as early as this summer.

Avaya could leave its bankruptcy woes behind as early as this summer, according to vice president and corporate treasurer John Sullivan.

In a letter published on US telecoms news channel No Jitter, Sullivan sounded a defiant tone as he

Avaya vice president John Sullivan
Avaya vice president John Sullivan says the company could emerge from bankruptcy as early as this summer.

insisted the UC software and platform developer would survive its current difficulties and come out the other side stronger than ever.

The Santa Clara, California company entered Chapter 11 bankruptcy, the US equivalent of administration, earlier this year with reported debts of $6.3 billion.

In his letter to No Jitter, Sullivan stated that he expected to file a restructuring plan this month (March). Of the restructuring, he insisted that the company was committed to retaining employees and continuing R&D investment, which he pointed out was historically well above the industry average.

The most likely outcome, he said, was a company buyout which would see the debt paid off in exchange for equity.

“To date I’ve had discussions with more than 100 Avaya customers and partners about the process,” said Sullivan. “These conversations have been encouraging, as customers and partners express support for Avaya and confidence in our future.

“Every chapter 11 process is unique. In the case of Avaya, we have a healthy operating business that has been generating positive cash flow and setting records for operating profitability, as our product mix has shifted to 75% software and services.

“We are restructuring our balance sheet and operating in the ordinary course while we do so. We obtained court approvals required to enable us to fund our operations, pay employees, stabilise our supply chain, and meet our obligations to customers and partners. The creditor groups that are parties to the case have been supportive of this process, as it is not in anyone’s interest to disrupt the business.”

However, according a story the Wall Street Journal, one group of stakeholders which have been adversely affected are Avaya pension holders. The report claims that pension benefits were halted on 1 February until further notice, although Avaya moved to clarify that this did not affect standard pension payments.

CommsTrader Opinion

The potential closure of a business the size of Avaya would have sent shockwaves through the UC industry. As one of the top 3 global PBX vendors and a major force driving innovation in UC and collaboration technology, the loss of Avaya would be a bitter blow both to customers and to the 70 plus resellers in the UK trading the company’s products.

The positive tone struck by John Sullivan is very encouraging. What is particularly pleasing is the commitment he gave to protecting employees and R&D investment. Not only should that reassure people who work directly for the company, it also signals that Avaya has no intention of scaling down its operations or stepping back from the drive for innovation that has brought us products like Aura, Oceana and Breeze.

Obviously it awaits to be seen who potential buyers for the business might be, and no doubt they will have their own plans. But for the UC industry as a whole, news that one of our biggest and most recognisable brands looks set to continue is more than welcome.

What are your thoughts? Are you an Avaya customer, reseller, or employee? What do you make of John Sullivan’s announcement? What are your hopes for the business going forward? As ever, we would love to read your views in the comments section below, and please feel free to share this article with friends and colleagues.

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2 Comments

  1. Scott Thomas March 9, 2017
  2. Paul Newham Paul Newham March 9, 2017

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Written by Paul Newham

Paul Newham

Hi I'm Paul, I specialise in technology, covering telecoms, cloud and IT infrastructure and digital marketing.