Avaya filed for protection from bankruptcy in the US courts yesterday (Thursday 19th January). This move is to allow them the freedom to re-structure their debt and their balance sheet. This debt has come about from their original public-to-private buy-out, and from subsequent acquisitions, and is not a sign that their underlying businesses is in trouble. Avaya's ongoing operations continue to be profitable and cash generative, and they continue to hold the number 1 and 2 positions globally in nearly all the markets they serve, have market leading products that analysts, partners and customers all continue to rate highly, and enjoy high levels of customer satisfaction as measured through net promoter scores.
While Avaya has made this Chapter II filing, they continue to operate as business as usual, and are well funded with the cash to see them through their continuing operations. They will be continuing to launch products, conduct R&D and to support their customers.
As Avaya's leading indirect partner in the UK, Maintel has been working closely with the International and UK leadership teams and we are confident that Avaya will emerge from this process in a strong market position with their corporate and debt structure resolved.
Avaya has asked Maintel to share the below message with our customers, which contains links should you require further information. As always, do please contact your account manager if you have any further questions.
After assessing a wide range of alternatives to address its capital structure and improve its balance sheet, Avaya has announced that it has filed voluntary petitions to restructure under chapter 11 of the U.S. Bankruptcy Code. This restructuring filing only affects Avaya Inc. and certain other domestic subsidiaries; the company’s foreign affiliates are not affected by this filing. While certain branch offices of Avaya’s U.S. operations may see some limited impact, Avaya is working to facilitate a smooth transition there as well. Avaya has also filed a number of customary “first-day” motions with the Court to facilitate a smooth transition into chapter 11 and minimize business disruption, including a motion seeking authority to continue and honor the company’s obligations under certain customer programs.
Importantly, Avaya is fully focused on the future and does not expect to experience any material disruption as a result of the chapter 11 cases. Avaya is operating business as usual, and remains fully committed to providing the same innovative products and industry-leading services customers have come to expect. Avaya does not plan on discontinuing any products or services at this time.
So why is Avaya taking this action? While its business is healthy and performing well – as reflected in its fourth quarter and fiscal year 2016 financial results – Avaya needs to address its debt and interest expense. Improving Avaya’s balance sheet will help position the company for long-term success and enable it to be an even better partner for you. Avaya is confident that it can emerge as a stronger, more competitive company with the financial flexibility to invest in innovation and growth to expand its market-leading positions, and create solutions and services that will meet your needs today and well into the future.
Avaya is working diligently to move through this process as quickly as possible, and will make every effort to provide regular updates as details become available throughout the chapter 11 cases. In the meantime, Avaya has created several resources that provide additional details on this announcement:
Avaya is confident that this process will result in a company that is stronger and better positioned to help customers transform and grow their businesses.