Avaya goes from success to bankruptcy – Company files request for protection from creditors

One of the largest producers of phone systems and contact centers in the world, Avaya, filed for Chapter 11 bankruptcy protection on January 19, 2017.

The debt of USD 6 billion and the debt towards pension funds of USD 1.7 billion are slowly dragging the company down.

As reported last month, the total turnover in the third fiscal quarter of 2016 reached USD 882 million, a drop of USD 117 million compared to 2015. Avaya is not alone in its troubles, but it is additionally burdened by unfavorable credit ratings and huge debts of USD 6 billion, of which USD 600 million is due in a year. In 2016, the company recorded a loss of nearly USD 750 million.

Before initiating the bankruptcy proceedings, Avaya considered selling its contact center business for around USD 4 billion in order to cover certain debts, but it was decided not to head down that road, as it would lead them to the same position sooner or later.

The company's troubles could increase, too, as the plan of reorganization and exiting the bankruptcy proceedings is based on the current turnover, but it remains to be seen how big markets will react to Avaya's bankruptcy, more precisely, how many companies are there which are prepared not just to buy the Avaya system, but to also keep the current systems, without knowing whether the company would even exist the day after.

Many of them still remember the case of Nortel, a former giant, whose transition to the phase Avaya is in now meant the end of the company.

Time will tell whether Avaya has come to its end as well.

EKAPIJA

Avaya

Nortel

phone system production

contact center platform production

Avaya bankruptcy

Avaya turnover

Avaya debt

Avaya loss