Unified communications giant Avaya is filing for bankruptcy for the second time in six years.
The struggling firm filed for Chapter 11 bankruptcy protection in federal court in Texas. This had long been expected due to the company’s 2022 cloud subscription accounting problems, which led to substantial earnings and revenue target misses.
Avaya said in a press release that its Chapter 11 actions “will not impact the company’s customers, channel and strategic partners, suppliers, vendors or employees.”
The company has 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.
The firm lists the creditors with the largest unsecured claims as Verint Americas, in the amount of $22.93 million; Microsoft for $9.01 million; Wistron Corp. for $8.9 million; and solution provider giant SHI International for $7.71 million.
This is the second time Avaya has filed for bankruptcy the last time was 2017.
In May Avaya reported that it had missed its revenue target and posted a considerable earnings miss, with revenue down 20 per cent during the company’s third-quarter 2022. It replaced the company CEO Jim Chirico who had been in charge since the company’s first bankruptcy and bought in Alan Masarek in August.
Masarek said in a statement published on Tuesday. “Strengthening Avaya’s capital structure is a critical step to fully realise our transformation, and we are excited to move ahead as a well-capitalised company with one of the strongest balance sheets in our industry that includes substantial cash to invest in our own success.”
Completing the financial restructuring will cut the company’s total debt by more than 75 per cent, from approximately $3.4 billion today to approximately $800 million, Avaya said. Additionally, the firm said it has secured committed financing of approximately $780 million.
Avaya added that the financial restructuring will give it improved financial flexibility to boost its investment in communications products, solutions and services for customers, including the Avaya Experience Platform, its cloud-based Contact Centre offering.
