Avaya Files Chapter 11 – Lenders Win, Shareholders Lose

Dare We Say It … Déjà Vu?

No – it’s not you.  You’re remembering correctly.  This is Avaya’s second bankruptcy filing in six short years.  But this time, something’s different.

The prior bankruptcy was a free-fall bankruptcy, which means it was handed over to the court without a negotiated or mutually agreed-upon path through (and eventually out of) bankruptcy.  That’s why the process took so long and felt so adversarial.

This current bankruptcy filing is pre-packaged, meaning everything related to the restructuring has been pre-defined, pre-negotiated, and approved by the company and its creditors.

In this case, the original plan was for this restructuring to proceed outside the court system.  However, the lenders subsequently decided to involve the court.

And notably, this time, everything is out in the open.  The restructuring support agreement (RSA) is public, so everyone knows what will happen when.

Another benefit of having pre-negotiated all elements of the restructuring is that the process can move forward quickly.  At this point, Avaya expects to emerge in April.

So, what will the new (and financially improved) Avaya look like?

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