TECHNOLOGY COMPANY AVAYA IS GOING BANKRUPT AGAIN

A corporation from the United States specializing in the production of corporate communication lines has filed for bankruptcy again. Avaya Holdings has resorted to chapter 11 of the bankruptcy Code, which allows the company to restructure and protect itself from creditors. Similarly, the organization is trying to reduce the burden of its financial obligations.

The firm plans to reduce its debt by four times (from $3.4 billion to $800 million). In a statement, the company indicated that the restructuring plan was supported by over 90% of the company's creditors. At the same time, they agreed to finance the organization for $ 780 million.

For a company that has existed since 2000, this is the second such case in recent years. In 2017, the company has already initiated the procedure, having a total debt of more than $6.3 billion. Then bankruptcy allowed the firm to reduce the burden by $3 billion.

After exiting bankruptcy proceedings (in December 2017), the company successfully conducted an IPO through the New York Stock Exchange. However, the company's revenue in 2018 fell by 13%, falling to $2.9 billion. In 2019, the situation has not changed fundamentally.

The company failed to improve the financial situation during the pandemic. In 2021, the firm made a net loss of $13 million. Last year, the management tried to solve financial problems by reducing staff. Employees complained in the press that they were fired after 15-minute negotiations. The company's management thus tried to reduce annual expenses by $225-250 million.

Note that the firm receives a significant part of its revenue (about 43%) from its foreign branches. In Russia, until recently, the company was represented by a subsidiary of Avaya CIS, which appeared in 2005. The company competed with Cisco Corporation.

According to open sources, in 2021 the company's revenue amounted to 1.3 billion. The corporation's net profit in Russia for the same period was 245.4 million. The organization's staff consisted of 70 employees.

Last year, the corporation announced its withdrawal from Russia. Opinions were expressed that the reason for such a step could be not only sanctions against the Russian economy, but also financial problems of the company itself.

The company plans to complete the current reorganization within a few months. During this period, employees will remain at their jobs, and customer service will continue. However, since February 14, the sale of the company's shares has been suspended. According to experts, after the restructuring, Avaya securities are likely to be devalued.

Photo: Wikipedia