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Avaya Update: After Chapter 11 What will Happen to Avaya in the UK?

Possible outcomes and planning tips for customers

This year, CommsTrader was fortunate enough to attend 2017’s Enterprise Connect, where we learned a great deal about the evolving unified communications industry, and listened to some of the conversations about the leading brands in the sector. It’s fair to suggest that Avaya have been a brand that’s on everyone’s lips lately, but most experts are still baffled by the company, and where they’re going on their path through chapter 11 bankruptcy.

Since the conception of the ‘Avaya’ branded business, Avaya haven’t seen a huge amount of growth in their revenues. Yet despite the uncertain future and the chapter 11 bankruptcy filing, it seems unlikely that Avaya will be going out of business any time soon.

However, what does the future of Avaya UK look like? After all, international businesses weren’t included in the chapter 11 filing.

Avaya’s Unsteady Path to the Future

Though I personally believe that Avaya aren’t at the end of their rope yet, that doesn’t mean that they’re necessarily out of the woods. Indeed, it seems like pensioners and debt-holders are going to experience some pain as the company struggles to find enough money for bonuses and pension schemes. However, for now, wages are being paid, and Avaya seems positive about the future, constantly claiming that they’re well on their way to the re-formation they’ve been planning from the start.




Yet, despite all of this, it seems that the best option for customers that are hoping for continued, and uninterrupted growth, is to come up with a plan for the future that may not involve Avaya.

If you don’t want to take risks with your business, then now might be the time to review your contractual obligations and determine what you really want to get out of the future of your communications technology.

Saying that, there’s always a chance that the UK version of Avaya could be un-touched by the various changes happening to the US business. After all, the “foreign affiliates” for the business are apparently just continuing with business as normal. However, it seems unlikely to be unaffected.

Avaya UK

What’s Happening with R&D?

So, why am I encouraging a back-up plan if I don’t think that Avaya are going down the drain?

It’s all about uncertainty. For instance, if you take a look at the R&D department for Avaya, right now, the company is claiming that everything is moving along like normal, but there are signs that budgets might have been put on hold when it comes to product improvement and innovation. In other words, if you stick with Avaya and they come out on top again, the brand may be left behind the curve when new and emerging solutions for UC&C emerge.

After all, while it’s fine for Avaya to claim that they’re doing well, and release statements that say they’re going to emerge stronger and healthier than ever before. However, if businesses can’t see the signs of that development themselves, then they’ll quickly begin to lose faith in the brand.

Right now, Avaya are concentrating on reducing the amount of disruption that their employees, partners, and customers are facing as a result of their unsteady financial circumstances. They have no plans to discontinue any of their products to help them deal with the costs of the bankruptcy, and so far, nothing too drastic has happened.

The first hearing on Avaya’s first day motions took place on January 20th, and the company didn’t see any salary cuts. They’ve continued to pay wages as normal. However, on the other hand, the end of March was the target for the release of a debt-structuring plan, and we haven’t seen any sign of that yet either. (see key dates here)

Most recent official statement:

Avaya remains in ongoing dialogue with our creditors and other stakeholders as part of the financial restructuring process. We have prepared a Plan of Reorganization and related Disclosure Statement, supported by a significant body of work and analysis, and have decided to briefly continue discussions with our creditors before formally filing these documents with the Court. We believe taking this additional time will be helpful as our goal remains to build consensus around a swift emergence from chapter 11. Our stakeholders’ goals are aligned with the company’s; namely, completing our balance sheet restructuring as quickly as reasonably possible.

Possible Outcomes for Avaya

If they want to keep the faith of their customers, internationally, and in the UK, then Avaya need to continue taking steps to prevent disruption, while also focusing on R&D and staff retention to preserve their future. This could mean that Avaya consider outcomes such as:

  • The exchange of debt for equity
  • The sale of pieces of the company
  • Liquidation
  • A smaller Avaya (with pieces sold off)

Whatever the outcome, the longer the debt restructuring plan takes, the higher the risk for the company will be. Avaya needs to show its customers that it knows what it’s doing, or it could risk losing everything to competition displacement programs. Right now, numerous channel partners are already planning to switch away to other vendors, even though Avaya may never end up at the point of liquidation.

No-one knows at this stage why international businesses weren’t included in the chapter 11 restructuring, and we’re still waiting to see what this company change will mean for Avaya UK customers and channel partners. Is business as normal going to continue, or when the new restructuring plan emerges, will we see those changes bleed into the UK too?

The story so far:

2 Comments

  1. Ian Hunter June 2, 2017

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Written by Rob Scott

Rob Scott

Hi, I'm Rob Scott - Publisher. Fanatical about Unified Comms, Cloud & Contact Centres :)