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Avaya Pension Plans At Risk Amid Potential Chapter 11 Bankruptcy Filing?

Avaya’s pension plans had a gap of nearly $1 billion when 2015 ended, according to The Wall Street Journal. Although Avaya hasn’t filed for chapter 11 bankruptcy protection that remains a distinct possibility. And that has some Avaya retirees worried.

> Updated Jan 19, 2017: Avaya Files for Chapter 11 Bankruptcy Protection
> Related: Avaya VP says company debt is “manageable”
> Updated Feb. 22, 2017: Avaya Stops Some Pension Payments

According to The Wall Street Journal:

“Companies that file for chapter 11 protection sometimes seek to terminate their pension plans, putting them in the hands of the Pension Benefit Guaranty Corp., the U.S. pension insurer. For plans terminated in 2016, the PBGC caps annual payouts at $60,136. The company is in confidential talks with the PBGC, according to people familiar with the matter. Still, the plans could emerge from the process unscathed…

…A group of Avaya retirees backed by the National Retiree Legislative Network, a coalition of retiree groups that represents U.S. pensioners, is banding together to fight to protect the pensions in bankruptcy. The group’s leader, Vern Larson, said he has been overwhelmed with calls from worried retirees.”

Avaya’s pension plans have more than 15,000 beneficiaries, the journal reported.

Avaya: What Went Wrong

Rumors about a potential Avaya chapter 11 bankruptcy filing have swirled since November 2016. Silver Lake and TPG paid $8 billion for Avaya in October 2007 — shortly before the Wall Street financial crisis and housing market bubble emerged.

Further complicating matters, cloud services, mobile and software undercut Avaya’s core VoIP phone business. Also, rivals like Cisco Systems and Microsoft doubled down on their various unified communications and cloud communications efforts. Some pundits believe Avaya is suffocating under a $6 billion debt load.

Now, Avaya employees, retirees, partners and customers are holding their breadth — waiting and wondering if an Avaya chapter 11 bankruptcy filing could arrive before the New Year. No doubt, Avaya pension plan participations also are nervous about the variables ahead.

Avaya has not publicly commented on the potential bankruptcy filing.

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25 Comments

Comments

    Bryan Lewis:

    I am Avaya retiree , this really sucks

      Bill Hala:

      I filed for lump sum 8 months ago, the y lost application, filed again, they did not have paper work to complete it. That claims Jan 10th sending it to me again.
      Fraud!

    Debra A Daly:

    I have worked over 30 years for New England Tel, AT&T and Lucent. My last years as Avaya. 40 years total. This can’t be right. People like me who gave their lives and paid in are now getting screwed. There must be some kind of grandfathered plan in place. We are people your workers we don’t deserve this.

    Joe Panettieri:

    Hi Folks: Thanks for your readership and comments, though I’m sorry it involves such a challenging issue. Preliminary details about the actual bankruptcy filing are here. The filing doesn’t necessarily mean the pensions will be eliminated. We will update our coverage if/when more details emerge.

    You can reach me directly here: Joe@AfterNines.com.

    -jp

    Richard Johnson:

    I dont think theres reason to worry too much. The PBGC told me that unless you get more than $5000 a month you will not get a reduced pension payments. Whew!

      Joe Panettieri:

      Richard: Please let us know if you hear anything else re: Avaya pensions. Joe@AfterNines.com
      -jp

    Gary Krispin:

    Started with Teletype in 1964, went through many AT&T entities, Lucent Technologies then retired with Avaya. Hopefully the pension we earned will not go away. Myself and I am sure many other retirees depend on these funds and would be in a dire financial situation if they stop. I hope they keep us posted as to what is going on and not just let us hanging, Hope you will have some insight as to situation and keep us informed. Thank you. .Gary Krispin

    Gary Krispin:

    Any updates on Avaya?

      Joe Panettieri:

      Hi Gary: Thanks for your continued readership. You can find future updates, if/when they emerge, here.
      -jp

    BILL MCFAULL:

    LAYED OFF AFTER 36 YEARS WITH AVAYA,AND THE REST OF THEM PENSION IS ONLY 1100.00 I WAS A MATERIAL HANDLER I CAN NOR MAKE IT WITH OUT IT.I DONT KNOW WHAY I AM GOING TO DO.DO YOU NO IF THE LIFE INSURANCE WILL BE AFFECTECTED?THANKS BILL MCFAULL PHILADELPHIA PA

    Linda:

    I thought all pensions were placed in trust because of what Eron done to their employees. Please let me ,now if this is true.

    Kevin Kimber:

    There is a conference call with the CWA Bankruptcy Attorney to address all concerns. Let’s get inform and not speculate. I understand she is a great attorney and CWA has hired her. Please get with your locals and see if they are going to have a town hall setting to hear the call. There is still time to submit your questions or concerns. The call is scheduled for tomorrow evening. Get involved!

      Joe Panettieri:

      Kevin: ChannelE2E will be sure to reach out to the CWA for details. If we gather any meaningful information we’ll post a follow-up blog. Thank you.
      -jp

    Lloyd Rogge:

    I am a retired represented employee. I pray that the retirement fund stays. I am absolutely dependent on it. Still trying to get over the loss of my Lucent 401K. DEVASTATING.

    Bill Potter:

    Thanks for this information and any efforts to help this situation. 15000 of us need all the help we can get.

    Jan:

    Thanks for posting information —-
    Is there anything we as individuals or groups can do to help turn this situation in our favor?

    Joe Panettieri:

    Hi Jan: I recommend staying in touch with the Avaya retiree chapter of the National Retiree Legislative Network. Also, ChannelE2E’s ongoing Avaya coverage is here.

    -jp

    Gary Jarvis:

    Did comment already? Just keep me in the loop.

    Joe Panettieri:

    Hi Gary, ChannelE2E visitors. An update — Avaya has stopped paying some pension benefits…. We will continue to update our coverage as additional information surfaces.
    -jp

    Robin Eckerman:

    I found this piece on CHANNELe2e which at least had a bit of positivity…
    “Amid the filing, Avaya has obtained a committed $725 million debtor-in-possession (“DIP”) financing facility underwritten by Citibank. Subject to Court approval, this DIP financing, combined with the Company’s cash from operations, is expected to provide sufficient liquidity during the chapter 11 cases to support its continuing business operations and minimize disruption, Avaya asserted.”
    Thanks to everyone for their input!
    Robin Eckerman

    Joe Panettieri:

    Hey Robin: We’ll always strive to cover IT news from all angles. Glad you saw some of the potential silver lining information we presented.
    -jp

    Claire Anderson:

    Thank you very much for sharing all this info. I left Avaya in 1993 and haven’t started to collect on my pension yet. I am currently 55 years old. Do I need to worry? What normally happens in these situations when someone hasn’t started collecting their pension yet? (I just heard about this today – so I haven’t called the pension people yet).

      Joe Panettieri:

      Hi Claire: Thanks for your readership. I recommend checking in with a certified financial planner who is an expert in pensions, while also contacting Avaya for ongoing updates. ChannelE2E also continues to monitor Avaya for additional updates.
      -jp

    Ron Shelton:

    I am also worried about my benefits. I have a question. I retired with normal pension benefits and an early retirement incentive that gives me a supplemental pension. The document “Avaya Pension Plan for Salaried Employees” says this:

    “Your pension benefits under the Plan are insured by the Pension Benefit Guaranty Corporation (PBGC), a federal insurance agency. If the Plan terminates (ends) without enough money to pay all benefits, the PBGC will step in to pay pension benefits. Most people will receive all of the pension benefits they would have received under the Plan, but some people may lose certain benefits.
    The PBGC guarantee generally covers normal and early retirement benefits and certain benefits for your survivors.”

    This gives me some assurance. Is this correct? Are my supplemental pension benefits insured by PBGC if Avaya stops paying them? Since these benefits have not been paid for February, March, and possibly more, how are these benefits recovered?

    Please advise>

      Joe Panettieri:

      Hey Ron: Thanks for your note and readership. ChannelE2E isn’t in a position to comment on this. I’d suggest speaking directly with Avaya and a retirement benefits expert. In terms of ChannelE2E’s editorial coverage, we are watching for Avaya to file a new business plan (this month, I believe). It may provide new clues about the company’s debt and retirement plans.
      -jp

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