Avaya has begun cutting off some pension benefits for retirees, a signal that these benefits may be on the chopping block in connection with its chapter 11 bankruptcy case, according to The Wall Street Journal.
In a letter to retirees, The Wall Street Journal reported, Avaya said it would stop paying supplemental pension benefits on Feb. 1 to certain retirees until further notice. Some retirees recently received notice that March checks also wouldn’t arrive, the Journal said.
An Avaya spokesperson offered this statement to ChannelE2E: “Avaya continues to make qualified pension payments in the normal course during the chapter 11 process. However, the Company does not have the Court’s authority to make supplemental pension payments – which represent an additional amount above the IRS compensation or benefit limits on qualified pension plans – at this point in time.”
The Back Story
Faced with a heavy debt load, Avaya filed for chapter 11 bankruptcy protection in January 2017. Rivals like Cisco Systems, Mitel and ShoreTel have vowed to pursue and win over Avaya's customers and partners. A case in point: Mitel is offering a special promotion for Avaya users or anyone actively considering investing in an Avaya solution in 2017. Purchase a new MiCloud solution and get three months of Mitel cloud service free along with professional installation, the company says.
Meanwhile, Avaya officials have insisted that the company continues to perform well overall while retaining customers and partners. The company's most recent quarterly revenue results looked promising. Also, Avaya hosted a major customer conference last week in Las Vegas, while announcing a range of new partner engagements at the show. And ScanSource, a distribution partner, says its Avaya-oriented business continues to perform well.
Still, concerns about Avaya's pension plans have swirled since the bankruptcy rumors intensified in December 2016.
Among those standing up for Avaya's retirees: The Communications Workers of America. In January 2017, the organization stated:
"CWA is actively working to safeguard the workers and retirees of Avaya as the company moves through the bankruptcy process. We are gathering more information and have retained bankruptcy counsel. We are diligently representing our members’ interests as this process goes forward. CWA represents about 550 active customer service and technical workers at Avaya."
ChannelE2E will update this coverage as more information about Avaya's bankruptcy becomes available. Track all Avaya-related news here.
