Just 76 days after filing for bankruptcy, Avaya has exited Chapter 11 protection.
During this period, Avaya gained approval for its pre-packaged plan to repay creditors and rearrange its bills.
In doing so, the vendor chopped its debts down from $3.4BN to $800MN, now due in 2028.
The move also freed up $600MN in liquidity, which will fuel its “innovation without disruption” plans.
Utilizing this free cash flow, Alan Masarek, CEO of Avaya, aspires to create a more prosperous future for customers and employees.
“Today, we turn the page and enter a new future for Avaya, our people, and our customers,” he said. “We are excited to fully realize the hard work we’ve put into our business transformation.”
We are moving ahead with significant financial resources to accelerate investment in our portfolio as we continue delivering innovation without disruption to our customers.
Such a statement shows how far Avaya has come under Masarek’s leadership.
Indeed, shortly after he took over in August, the company warned investors there was “substantial doubt about the company’s ability to continue as a going concern.”
Now, the enterprise communications’ stalwart moves forward as a private company with a brighter outlook, cash in hand, and a new board of directors at the helm.
Although, the journey to this point has proven anything but smooth sailing.
Navigating Through Choppy Waters
As Desmond Tutu once said: “Hope is being able to see that there is light despite all of the darkness.” And, for Avaya customers and employees, it often seemed tricky to spot that hope, with many stories telling a tale of doom and gloom.
To make matters worse, some shareholders were Avaya employees – who likely earned stock as part of purchase plans and rewards.
Moreover, we’ve been here before. Indeed, the business previously filed for Chapter 11 bankruptcy in 2017, taking almost a year to break those bounds.
Thankfully, the process took only 76 days this time – within Avaya’s 90-day target (cue the “practice makes perfect” quips).
In addition, an entirely new board of directors will manage the transition, another factor that may make those rays of hope shine a little brighter for Avaya’s team.
Who Will Be Steering the Ship Forward?
Avaya announced a board reshuffle alongside its bankruptcy departure, with only Masarek preserving his position at the top table.
New names now sitting next to Masarek include:
- Patrick Bartels, Managing Member of Redan Advisors, LLC
- Patrick Dennis, CEO of ExtraHop
- Robert Kalsow-Ramos, Partner in Private Equity at Apollo Global Management, Inc
- Marylou Maco, former EVP Worldwide Sales and Field Operations at Genesys
- Aaron Miller, Partner in Private Equity at Apollo Global Management, Inc
- Donald E. Morgan, Chief Investment Officer, Managing Partner, and Portfolio Manager at Brigade Capital Management
- Tod Nielsen, former President and CEO of TalkWalker
- Jacqueline Woods, Chief Marketing Officer at Teradata
Maco is perhaps the standout name on the list, having held her position at market rival Genesys until January.
Just two months previously, Genesys announced that it would funnel all its R&D funds into its public cloud solution, stifling its legacy innovation and stamping out its Multicloud CX offering altogether.
The value proposition in Multicloud CX was that it made it easier for companies to run their contact centers in a hybrid setting.
As such, the move may have opened up space for vendors catering to larger businesses that want an enterprise contact center solution they can control and put in a cloud.
Perhaps Maco’s appointment underlines Avaya’s intent to seize this opportunity. Indeed, it aligns exceptionally well with Avaya’s innovation without disruption strategy.
What Does the Journey Ahead Look Like?
Avaya moves forward with a legacy contact center platform, a pure-play CCaaS model, and a hybrid offering. With the latter, the vendor aims to support enterprise customers in transitioning to the cloud at their own speed.
“Our customers are at different stages of their cloud journey,” said Masarek. “They want to move at a pace that meets their business needs – and in a way that allows them to adopt advanced functionality without business disruption.”
Avaya’s new, streamlined product roadmap was intentionally designed to do just this, incorporating input from our customers about the capabilities most meaningful to them.
Unfortunately, the vendor has yet to unveil which existing products will face the boot in this streamlined product suite.
Nonetheless, Avaya released a sneak peek of its future portfolio in December, with 34 blurred-out solutions under the tagline “exit”.
These likely include overlapping offerings and those that distract from Avaya’s new narrow focus – which the vendor hopes will bring it back to profitability by 2025.
If it can retain a significant chunk of its legacy base and engage them in its hybrid vision, Avaya may just do so. Indeed, that base includes 90 of the Fortune 100 companies.
However, hopefully, this is the end of Avaya’s bankruptcy tale, and the enterprise communications stalwart manages to retain its place at the market’s forefront.
After all, it’s now on strike two…