Avaya files Chapter 11 reorg plan, reduces debt by $4 billion

Avaya has filed a chapter 11 reorganization plan the company says will significantly reduce Avaya’s pre-filing debt, strengthening its balance sheet and improve financial flexibility and position it for long-term success.

+More on Network World: Avaya plan deploys network virtualization, segmentation to guard business jewels+

Under the proposed plan, which must be approved by the United States Bankruptcy Court for the Southern District of New York a number of actions are proposed, including:

  • Avaya’s pre-filing debt will be reduced by more than $4 billion;
  • Avaya’s restructuring will be achieved through a debt-for-equity exchange, in which certain secured creditors would acquire 100 percent of reorganized Avaya’s equity;
  • Avaya’s general unsecured creditors will share pro rata in a cash pool;
  • Avaya will continue to honor and maintain its qualified U.S. pension plans, which make up the vast majority of Avaya’s pension obligations, following its emergence from bankruptcy;
  • Avaya will continue to honor and assume its two collective bargaining agreements and all related agreements.

+Analysis of the Avaya filing on Network World: Avaya’s post-bankruptcy plan should not impact customers, partners+

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