You may have heard that Avaya Inc. has filed for Chapter 11, which is a financial restructuring process in the United States. But what does this mean for Canadian Customers?

At BrantTel, we believe it is important to bring clarity and transparency to the conversation. In our 35 years in this business, we’ve navigated several technological shifts with varying degrees of disruption, and our industry is in the midst of such a shift from hardware to software and cloud-driven solutions. As you might expect, as technology changes, so does the shape of the supplier marketplace. Avaya is a company, previously tied to investments in hardware, changing their financial structure to match existing and continuing investments in forward-thinking technology. Under Chapter 11, they will continue operations with the intent of emerging stronger and more sustainable. Additionally, it’s important to note that this affects Avaya Inc (USA), and that foreign affiliates, including Avaya Canada, will continue normal operations with no changes at this time.

In summary,

  1. There is no change to day to day operations for sales, implementation or support
  2. All current support contracts are active, and all features of those contracts remain in place.
  3. This action only affects Avaya Inc. and certain domestic entities, which means that Avaya Canada will continue normal operations.

As we have said before, consolidation in the technology industry has been very active over the past few years, and this trend is likely to continue. With 35 years providing communications technology solutions to the Canadian marketplace, we’ve experienced shifts like this in the past, and we’ve learned from those experiences.

We will continue to provide Avaya solutions to the Canadian marketplace and provide sales, design, implementation and support for the Avaya product line with confidence. Like many of you, we will watch closely as these proceedings continue, but we believe that Avaya will emerge positioned for future success and to meet the needs of your business, as many businesses have in the past. This is explained very well by Avaya’s CEO Kevin Kennedy in this video.

As always, we’d be happy to answer any questions you may have. Feel free to call or email us any time.

Here’s the official statement from Avaya Canada:

Avaya Inc. Files for Chapter 11 Protection

Operations Remain Ongoing During Process

NEW YORK, NY – January 19, 2017 – Avaya Inc. (together with certain of its domestic subsidiaries, collectively, the “Company”) today announced that it has commenced a formal proceeding to restructure its balance sheet to better position itself for the future.  To facilitate this restructuring, the Company filed voluntary petitions under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “Court”).  The Company’s foreign affiliates are not included in the filing and will continue normal operations.

The Company has obtained a committed $725 million debtor-in-possession (“DIP”) financing facility underwritten by Citibank.  Subject to Court approval, this DIP financing, combined with the Company’s cash from operations, is expected to provide sufficient liquidity during the chapter 11 cases to support its continuing business operations and minimize disruption.

“We have conducted an extensive review of alternatives to address Avaya’s capital structure, and we believe pursuing a restructuring through chapter 11 is the best path forward at this time,” said Kevin Kennedy, Chief Executive Officer of Avaya.  “Reducing the Company’s current debt through the chapter 11 process will best position all of Avaya’s businesses for future success.”

As part of Avaya’s comprehensive assessment of options to address its capital structure, the Company evaluated expressions of interest in various Avaya assets, including its Contact Center business.  After extensive evaluation in consultation with its financial and legal advisors, the Avaya Board of Directors has determined that focusing on the Company’s debt structure is paramount and a sale of the Contact Center business at this time would not maximize value for Avaya’s customers and all of its stakeholders.  Avaya remains in ongoing negotiations to monetize certain other assets, as appropriate, to maximize value for all stakeholders.

“This is a critical step in our ongoing transformation to a successful software and services business. Avaya’s current capital structure is over 10 years old and was put in place to support our business model as a hardware-focused company, which has evolved significantly since that time.  Now, as a result of the terms of Avaya’s debt obligations and the upcoming debt maturities, we need to recapitalize the Company,” continued Mr. Kennedy.

“Our business is performing well, and we are confident that we can emerge from this process stronger than ever, as this path is a reflection of our debt structure, not the strength of our operations or business model.  Pursuing restructuring through chapter 11 will enable us to reduce Avaya’s debt and interest expense, while providing increased financial flexibility to further invest in innovation and growth to enhance our market-leading competitive position.  Most importantly, we are keenly focused on minimizing disruption to our customers, partners and employees and do not expect to experience any material disruptions during the chapter 11 cases.”

Contemporaneously with the filing of the voluntary petitions, the Company filed a number of “first-day” motions with the Court to facilitate a smooth transition into chapter 11 and minimize business disruption.  Among other things, the motions request authorization to continue certain customer and partner programs, and to honor certain employee compensation and benefit obligations.

For more information about the chapter 11 case, including access to Court documents, please visit: https://cases.primeclerk.com/avaya.

For more than 30 years, BrantTel Networks has been at the forefront of helping Canadian businesses leverage communications technology to increase collaboration, engagement, and growth.