Leveraged Loans

Avaya reorganization plan confirmed as RSA results in speedy bankruptcy

By Jack Hersch
March 23, 2023

Avaya Holdings Corp. announced today that, roughly five weeks after filing for bankruptcy protection in the Southern District of Texas, the court has confirmed its reorganization plan. The company had filed for a prepackaged Chapter 11 proceeding on Feb. 14 with a restructuring support agreement (RSA) in place signed by more than 90% of the company’s secured lenders and with an expectation of completing the process in under 90 days.

The reorganization will trim Avaya’s total debt by more than 75%, reducing it to roughly $800 million, from around $3.4 billion, and improve liquidity by over $650 million, according to company press releases. Leverage is projected to be under 1x after emergence, the company added.

The reorganization plan was supported by “an overwhelming majority” of financial stakeholders, including lenders and strategic partners, as evidenced by the RSA, Avaya noted. CEO Alan Masarek said that following emergence, the company has “considerable resources to execute on our R&D initiatives and cloud communications roadmap."

Avaya will be privately held following the bankruptcy’s conclusion, backed by existing lenders including, among others, Apollo Global Management and Brigade Capital Management, each with “significant incremental capital” invested.

The advisors in the case included Kirkland & Ellis as Avaya’s legal counsel, Evercore Group as its financial advisor and AlixPartners as its restructuring advisor. An ad hoc first-lien lender group was assisted by lawyers Akin Gump Strauss Hauer & Feld, investment banker Centerview Partners and financial advisor Alvarez & Marsal. A second first-lien lender group was represented by Paul, Weiss, Rifkind, Wharton & Garrison as legal counsel and FTI Consulting as financial advisor. Certain holders of the company’s secured exchangeable notes were guided by Debevoise & Plimpton as legal counsel.

Avaya is a provider of digital communications software, services and devices for businesses.

Featured image by Gorodenkoff/Shutterstock

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