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.
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.