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Avaya Pension Payments & Proposed Reorganization Plan: Update

Avaya has filed a proposed chapter 11 plan for reorganization, which includes a commitment to “honor and maintain its qualified U.S. pension plans, which make up the vast majority of Avaya’s pension obligations, following its emergence from bankruptcy.”

That statement should be welcome news to thousands of Avaya retirees, many of whom were concerned about Avaya’s commitment to core pension payments. The concerns intensified when the company stopped paying some supplemental pension benefits in March 2017.

Avaya’s Reorganization Plan Details

Kevin Kennedy

According to an April 13 statement from the company, the proposed reorganization plan  “will continue to evolve as Avaya works toward creditor consensus and confirmation by the Court.” The plan’s framework includes these points, Avaya said:

  • pre-filing debt will be reduced by more than $4 billion;
  • restructuring will be achieved through a debt-for-equity exchange, in which certain secured creditors would acquire 100 percent of reorganized Avaya’s equity;
  • general unsecured creditors will share pro rata in a cash pool;
  • the company will continue to honor and maintain its qualified U.S. pension plans, which make up the vast majority of Avaya’s pension obligations, following its emergence from bankruptcy; and
  • Avaya will continue to honor and assume its two collective bargaining agreements and all related agreements.

Avaya has requested that the court schedule a hearing on May 25 to consider approval of the disclosure statement related to the Plan.

Additional Progress

In a prepared statement, CEO Kevin Kennedy indicated that the company has been performing well amid its bankruptcy status. The company’s consolidated balance sheet now has more than $750 million in cash, he added.

Faced with a heavy debt load, Avaya filed for chapter 11 bankruptcy protection in January 2017.

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2 Comments

Comments

    Don:

    While Avaya is honoring it’s retiree’s Qualified Pensions, it is not going to honor it’s Supplemental Pensions which affect 830 retirees. I am one of those and it means a life time loss of $880,000, 40% of my total pension benefit.

      Joe Panettieri:

      Hi Don: Thanks for your note though I’m sorry it involves such a major pain point for you and other retirees. ChannelE2E has not independently confirmed the figures you shared in your note but we did cover Avaya’s failure to pay some supplemental benefits in February 2017. We’ll continue tracking the story. Feel free to email me with any additional thoughts or updates.

      joe [at] AfterNines [dot] com

      -jp

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