SHARE



ABOUT THE AUTHOR


Phil Edholm
Phil Edholm is the President and Founder of PKE Consulting, which consults to end users and vendors in the communications...
Read Full Bio >>
SHARE



Phil Edholm | May 25, 2017 |

 
   

Avaya Bankruptcy: Hearing on Reorganization Plan Delayed

Avaya Bankruptcy: Hearing on Reorganization Plan Delayed While court due to address networking sale today, review of proposed reorganization plan postponed until late June.

While court due to address networking sale today, review of proposed reorganization plan postponed until late June.

Avaya is due in bankruptcy court today, May 25, as scheduled -- but the slated actions are not exactly what we expected a month ago.

The court today is set to review the Extreme Networks bid for Avaya networking business, and potentially approve the sale. With Avaya having received only this one bid, one would assume the court will award the data networking business to Extreme. One sticking point, however, could be an objection from Oracle, which opposes the sale due to the transfer of licenses. (A second company, Mentor Graphics, had also opposed the sale for the same reason, but that objection had been removed late last week.)

The other big event scheduled for May 25 had been a hearing for the formal presentation of management's reorganization plan to the court. This disclosure statement hearing was to start a clock to get votes for approving the plan by June 27, as I'd earlier written in the post, "Avaya Takes a Step, Not a Leap." The company has asked to move the disclosure statement hearing back to June 29 with the following statement:

    "Avaya and our major stakeholders have jointly determined that a one-month adjournment of the disclosure statement hearing is in the best interest of all stakeholders as we continue working toward a consensual conclusion of the restructuring process. At the request of our major creditor groups, we have adjourned the hearing in order to continue productive discussions around the terms of Avaya's ultimate restructuring. We remain committed to completing the restructuring process as quickly as possible. We continue to anticipate emerging from chapter 11 as early as the summer of 2017."

The intent of the disclosure statement hearing is to have the bankruptcy court review Avaya's disclosures and authorize the company to start soliciting votes for the plan of reorganization. Assuming a month for finalization after a June 29 disclosure hearing, the earliest a vote on the plan could take place would be late July. Even if the Avaya reorganization plan is approved at that time, the company would not likely be able to exit the bankruptcy process until late September or October. Between plan approval and exit from bankruptcy come numerous process steps, potentially including securing new bond commitments.

The delay signals that Avaya bondholders, which as I noted in the above-mentioned article will be looking to maximize what they recover, are reticent to approve the management plan as it stands. According to documents filed with the SEC this week, as of May 16 Avaya has entered into separate confidentiality agreements with certain members of an ad hoc group consisting of some first and second lien creditors ("Ad Hoc Crossholder Group"). These may be the bondholders that have both first and second position bonds and may be proposing a different allocation of the cash and equity of the company than that in the Avaya management proposal. The negotiation between the creditors appears to be an issue; there seems to be two proposals on the table, and the goal is to negotiate a deal.

This allocation, along with the evaluation of the current and future value of the company and the general management oversight structure of the company post-reorganization, are challenges that have extended the time to reach an restructuring agreement with the creditors. As I wrote earlier and will repeat here, the outcome of the Avaya bankruptcy process is still a waiting game, now extended into at least August for a clear answer.

It remains to be seen if the creditors will accept the plan or force a more drastic set of asset sale actions. If the Avaya management team and the creditors cannot agree on a reorganization plan soon, the prospects of an intact exit will decrease significantly.





COMMENTS



May 31, 2017

In the days of old, people in suits used to meet at a boardroom table to update each other on their work. Including a remote colleague meant setting a conference phone on the table for in-person pa

April 19, 2017

Now more than ever, enterprise contact centers have a unique opportunity to lead the way towards complete, digital transformation. Moving your contact center to the cloud is a starting point, quick

April 5, 2017

Its no secret that the cloud offers significant benefits to enterprises - including cost reduction, scalability, higher efficiency, and more flexibility. If your phone system and contact center are

June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.