Networking giant Avaya files for Chapter 11 bankruptcy: 5 things to know

Former networking giant Avaya Holdings Corp has filed for Chapter 11 bankruptcy and secured a financing of $780 million as it restructures its business. Earlier in September, Avaya had also announced restructuring, including job cuts, to reduce costs. Avaya’s shares have fallen nearly 99% last year. This is the second time that Avaya has filed for bankruptcy. Avaya previously filed for bankruptcy in 2017.What is Chapter 11?Chapter 11 is a section of the US Bankruptcy Code that allows companies to reorganize their capital structures while they continue to operate their businesses in the normal course.Actions not to impact employeesAvaya said in a statement that “these actions will not impact the company’s customers, channel and strategic partners, suppliers, vendors or employees.” The company stresses that it is not going out of business. “Our business will remain intact, and we are not selling or splitting off any of its parts,” the company said. The company said it expects this financial restructuring to be completed within 60 to 90 days.Assets and liabilities listedIn its bankruptcy court filing, 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. “Completing the Financial Restructuring will reduce our total debt by more than 75%, from approximately $3.4 billion today to approximately $800 million. Additionally, it will substantially increase our cash and liquidity position, enabling us to make significant investments in our innovative cloud-based communications portfolio and position Avaya for long-term success,” the company said in a statement. Read AlsoFTX sues Voyager Digital to claw back $446 million in 2022 loan paymentsFTX and Voyager both filed for bankruptcy amid a 2022 collapse in cryptocurrency markets, but Voyager’s bankruptcy preceded FTX’s filing by four months.Read AlsoCrypto lending unit of Genesis files for US bankruptcyGenesis Global Capital, one of the largest crypto lenders, froze customer redemptions on Nov. 16 after FTX stunned the financial world with its bankruptcy, fuelling concern that other companies could implode. The company is owned by venture capital firm Digital Currency Group (DCG).Microsoft among creditorsIn the court filing, the company listed the creditors with the largest unsecured claims. These include Verint Americas in the amount of $22.93 million; Microsoft for $9.01 million; Wistron Corp for $8.9 million; and SHI International for $7.71 million.Avaya CEO speakAlan Masarek, Avaya’s Chief Executive Officer, said, “I joined Avaya to help unlock the power of its iconic brand, global customer footprint, massive partner ecosystem, large-scale communications deployments and outstanding team. Building on this tremendous foundation, we have made significant progress pioneering an ambitious business model transformation, establishing a competitive product strategy for our subscription and cloud-delivered services and implementing operational efficiencies to better serve the Avaya ecosystem. Strengthening Avaya’s capital structure is a critical step to fully realize our transformation, and we are excited to move ahead as a well-capitalized company with one of the strongest balance sheets in our industry that includes substantial cash to invest in our own success.”