Avaya Holdings Corp is negotiating its bankruptcy with several entities who lent him money back in the day. Everything is part of a plan with which these entities, which are various investment funds, would keep control of the company once its bankruptcy was approved. This would be, according to Bloomberg, the type that allows companies to continue operating while they work on a plan to return what they owe to the entities that put money to support them.
The bankruptcy filing could happen very soon: by the end of this month, according to some sources. Its negotiation, as well as other related issues, has been carried out with the company’s main lenders. between them, with Apollo Global Management, Ares Management and Invesco.
In addition, Avaya has also begun other negotiations with prominent lenders, in this case regarding potential “debtor-in-possession” financing, to help finance the company while it is in bankruptcy. This yes, still there is not at all definitive, since the negotiations still follow his course and could break.
Avaya last month confirmed that it had received several restructuring proposals from various credit groups. Some of them are pressing for the company to be restructured through bankruptcy, while others prefer that Avaya continue out of court, according to various information submitted in this regard to the United States Securities and Exchange Commission.
If Avaya ultimately chooses to file for bankruptcy, it may open the door for some of its investors, who have seen the value of their investments fall, to go to court. Many holders of the company’s convertible bonds have decided not to enter negotiations with Avaya to protect their rights to go to court against Avaya management and officials if Avaya ends up in bankruptcy court.
Avaya angered many of its lenders last year after it made public some preliminary results that made it clear that they were not going to meet their objectives expected and anticipated in terms of income not even close. He did so just weeks after selling a “lower loan” to investors. This step also raised questions about how the company’s results had fallen so far from the forecasts shared with lenders during the loan syndication process.
Some investors, in fact, worried that the company might be misrepresenting its financial status, as well as breaching its fiduciary duties. Also that he had started negotiations in bad faith. These allegations could, in fact, serve as the basis for potential lawsuits. Meanwhile, at Avaya they continue with the negotiations, and if the company declares bankruptcy, it would be the second time it has done so. The first was in 2017.
