Avaya has filed a proposed chapter 11 plan for reorganization, which includes a commitment to "honor and maintain its qualified U.S. pension plans, which make up the vast majority of Avaya's pension obligations, following its emergence from bankruptcy."
That statement should be welcome news to thousands of Avaya retirees, many of whom were concerned about Avaya's commitment to core pension payments. The concerns intensified when the company stopped paying some supplemental pension benefits in March 2017.
Avaya's Reorganization Plan Details
According to an April 13 statement from the company, the proposed reorganization plan "will continue to evolve as Avaya works toward creditor consensus and confirmation by the Court." The plan's framework includes these points, Avaya said:
- pre-filing debt will be reduced by more than $4 billion;
- restructuring will be achieved through a debt-for-equity exchange, in which certain secured creditors would acquire 100 percent of reorganized Avaya's equity;
- general unsecured creditors will share pro rata in a cash pool;
- the company will continue to honor and maintain its qualified U.S. pension plans, which make up the vast majority of Avaya's pension obligations, following its emergence from bankruptcy; and
- Avaya will continue to honor and assume its two collective bargaining agreements and all related agreements.
Avaya has requested that the court schedule a hearing on May 25 to consider approval of the disclosure statement related to the Plan.
Additional Progress
In a prepared statement, CEO Kevin Kennedy indicated that the company has been performing well amid its bankruptcy status. The company's consolidated balance sheet now has more than $750 million in cash, he added.
Faced with a heavy debt load, Avaya filed for chapter 11 bankruptcy protection in January 2017.
