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Bankrupt Avaya Stops Paying Some Pension Retirement Benefits

Avaya has begun cutting off some pension benefits for retirees, a signal that these benefits may be on the chopping block in connection with its chapter 11 bankruptcy case, according to  The Wall Street Journal.

In a letter to retirees, The Wall Street Journal reported, Avaya said it would stop paying supplemental pension benefits on Feb. 1 to certain retirees until further notice. Some retirees recently received notice that March checks also wouldn’t arrive, the Journal said.

An Avaya spokesperson offered this statement to ChannelE2E: “Avaya continues to make qualified pension payments in the normal course during the chapter 11 process.  However, the Company does not have the Court’s authority to make supplemental pension payments – which represent an additional amount above the IRS compensation or benefit limits on qualified pension plans – at this point in time.”

The Back Story

Faced with a heavy debt load, Avaya filed for chapter 11 bankruptcy protection in January 2017. Rivals like Cisco Systems, Mitel and ShoreTel have vowed to pursue and win over Avaya’s customers and partners. A case in point: Mitel is offering a special promotion for Avaya users or anyone actively considering investing in an Avaya solution in 2017. Purchase a new MiCloud solution and get three months of Mitel cloud service free along with professional installation, the company says.

Meanwhile, Avaya officials have insisted that the company continues to perform well overall while retaining customers and partners. The company’s most recent quarterly revenue results looked promising. Also, Avaya hosted a major customer conference last week in Las Vegas, while announcing a range of new partner engagements at the show. And ScanSource, a distribution partner, says its Avaya-oriented business continues to perform well.

Still, concerns about Avaya’s pension plans have swirled since the bankruptcy rumors intensified in December 2016.

Among those standing up for Avaya’s retirees: The Communications Workers of America. In January 2017, the organization stated:

“CWA is actively working to safeguard the workers and retirees of Avaya as the company moves through the bankruptcy process. We are gathering more information and have retained bankruptcy counsel. We are diligently representing our members’ interests as this process goes forward. CWA represents about 550 active customer service and technical workers at Avaya.”

ChannelE2E will update this coverage as more information about Avaya’s bankruptcy becomes available. Track all Avaya-related news here.

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3 Comments

Comments

    Kenneth Rimmel:

    I have not received any letter from Avaya at this time and I have received my February pension check; soon I will know if I will get my March check. I began at Southwestern Bell in 1966 and went with the equipment side following the divestiture in 1984. I too ended up with AT&T Information Systems, then Lucent Technology in the 1996 spin-off, and Avaya in 2000. I was given an early retirement (by 4 years) in 2010 and the two year incentive, along with the two years built up from the contract carried us until I qualified for Social Security. In 2015 Avaya informed us that we had to find insurance elsewhere because the CWA allowed them to drop medical coverage on all retirees who left before October 2015; so far the union has yet to tell me anything about this. I learned about the bankruptcy filing in a two sentence note in a union mailing, with no added details. I learned about the pension cuts after searching for more news earlier this week. Again the CWA and this time including Avaya, has not released any information to its members. My pension is half of our income and we cannot afford any cuts in it. My wife is too young to go on Social Security and at 69 with my physical issues, it will be difficult to find a job to make up any cuts. In 1989 our company had about seven thousand technicians working in the field, when I retired in 2010, it was a little under two hundred because almost all of the work was given to non-union contractors. When we learned that some of the executives who helped to fix Lucent’s stock so that it hit $80 before in crashed to less than two dollars were named to head Avaya, we knew that big changes were in our future.

    Kristen:

    I was laid off from Avaya in 2005. I submitted my paperwork to draw the lump sum payment on my Avaya pension in 12/2016. They sent me my check first week of 2/2017 and put a stop payment on the check. I called them to ask why when I put my paperwork in 2016 and they told me they received it on 12/20 (I sent it to them on 12/9/2016). If they had gotten it on 12/15/2016, I would have made the “cut off” date and my check would have been issued on 1/1/2017 and been honored. It boggles my mind if I submitted this in 2016 why I am being penalized… I get it for anyone who did it after they filed. This is insane…

      Joe Panettieri:

      Kristen: If you and other Avaya retirees would like to share your stories more fully with me, I’m available at Joe@AfterNines.com.

      -jp
      Content Czar, ChannelE2E

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