SHARE



ABOUT THE AUTHOR


Beth Schultz
Beth Schultz is editor of No Jitter and program co-chair for Enterprise Connect. Beth has more than two decades of...
Read Full Bio >>
SHARE



Beth Schultz | August 29, 2017 |

 
   

Avaya Gets Judge's Nod to Commence Voting

Avaya Gets Judge's Nod to Commence Voting Company sees an end in sight for its bankruptcy process, which it now hopes to exit before the end of the year.

Company sees an end in sight for its bankruptcy process, which it now hopes to exit before the end of the year.

When Avaya filed for bankruptcy back on Jan. 11, its stated desire was to emerge from the process by the time summer came to a close. While that's no longer a possibility, an exit by year's end is within reason, John Sullivan, corporate treasurer, shared earlier today during a business update webcast.

This expectation comes with court approval of the amended disclosure statement Avaya filed earlier this month, as discussed at the time by industry watcher Sheila McGee-Smith, principal of McGee-Smith Analytics, in the post, "Avaya Takes Critical Next Step in Bankruptcy Process." The bankruptcy judge signed off on the revised disclosure statement last Friday, Aug. 25, allowing Avaya to commence the voting process on its bankruptcy plan, Sullivan said.

Voting deadline is Oct. 27, with a confirmation hearing set to take place on Nov. 15. An official exit typically takes place within two to three weeks of confirmation, so that would have Avaya out of bankruptcy late this November or early December, Sullivan said.

At the time Avaya filed its amended disclosure statement earlier this month, as noted in the above-mentioned post from McGee-Smith, Avaya had entered into a plan support agreement with a critical group of first lien debt holders and had arranged to transfer certain pension obligations to the Pension Benefit Guaranty Corporation (PBGC). Since then, Avaya has gotten the OK from the unsecured creditors committee, meaning it has attained agreement from three of the four major creditor groups to support its amended plan of reorganization.

The wild card is the second lien creditors, which by nature of a bankruptcy will probably be "taking most of the pain here because their recovery is going to be very small," Sullivan said. The second lien group has not pledged support of the agreement, and will likely "raise some noise," but Avaya attorneys don't believe these creditor are in much of a position to hold up the process, he added. (Last Friday, the judge rejected the second lien holders' request for remediation.)

Best case, Sullivan said, Avaya might tweak the plan to garner support from second lien creditors -- or the judge simply will impose the solution sans support from second lien holders.

Either way, Avaya's plan is to convert $6 billion in debt to equity, so debtholders end up owning the company. First lien creditors would own 91.5% of the company, and second lien creditors one percent, Sullivan said. The PBGC, which will take over the salaried pension plan, gets a 7.5% stake, as well as $350 million in cash. Nearly all participants (about 99%) in Avaya's qualified pension plan will receive the full value of their benefits under the deal, he added.

Avaya's debt does not entirely disappear under the current plan. As the plan stands now, when Avaya emerges from bankruptcy it will issue exit financing at an agreed amount of $2.9 billion, Sullivan said. "Now, while that might sound like a lot of debt, relative to the EBITDA we generate, it's a very sustainable amount of debt. In fact, we generate enough cash almost to pay that down in the next three to four years," Sullivan said.

The plan, he continued, is to have $350 million in cash -- the remainder of $2.9 billion will be disrupted to first lien creditors and to pay off the company's $750 million DIP loan. This is an appropriate capital structure for Avaya's emergence, he promised.

Follow Beth Schultz and No Jitter on Twitter!
@Beth_Schultz
@nojitter





COMMENTS



Enterprise Connect Orlando 2018
March 12-15 | Orlando, FL

Connect with the Entire Enterprise Communications & Collaboration Ecosystem


Stay Up-to-Date: Hear industry visionaries in Keynotes and General Sessions delivering the latest insight on UC, mobility, collaboration and cloud

Grow Your Network: Connect with the largest gathering of enterprise IT and business leaders and influencers

Learn From Industry Leaders: Attend a full range of Conference Sessions, Free Programs and Special Events

Evaluate All Your Options: Engage with 190+ of the leading equipment, software and service providers

Have Fun! Mingle with sponsors, exhibitors, attendees, guest speakers and industry players during evening receptions

Register now with code NOJITTEREB to save $200 Off Advance Rates or get a FREE Expo Pass!

September 20, 2017

Customer experience can make or break your business. But how do you achieve outstanding customer service when you're dealing with outdated organizational structure, lagging technology, dated proces

August 16, 2017

Contact centers have long been at the leading edge of innovation in communications technology, given their promise of measurable ROI and the continual need to optimize customer interactions and sta

July 12, 2017

Enterprises have been migrating Unified Communications & Collaboration applications to datacenters - private clouds - for the past few years. With this move comes the opportunity to leverage da

September 8, 2017
Greg Collins, a technology analyst and strategist with Exact Ventures, delivers a status report on 5G implementation plans and tells enterprises why they shouldn't wait to move ahead on potential use ....
August 25, 2017
Find out what business considerations are driving the SIP trunking market today, and learn a bit about how satisfied enterprises are with their providers. We talk with John Malone, president of The Ea....
August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular BlogGeek.me blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
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.