Avaya files for Chapter 11 protection, ditches call center business sale

second quarter

Avaya has filed for Chapter 11 bankruptcy on Thursday in an effort to reduce debt, but the troubled vendor decided to not sell its call center business.

The Santa Clara-based vendor said that it obtained a $725 million loan to fund its operations during the filing.

An affiliate of Citigroup will provide the loan.

RELATED: Avaya helps Oregon's Boulder Falls Inn make Wi-Fi a user amenity

“We have conducted an extensive review of alternatives to address Avaya’s capital structure, and we believe pursuing a restructuring through chapter 11 is the best path forward at this time,” said Kevin Kennedy, CEO of Avaya, in a release.  “Reducing the Company’s current debt through the chapter 11 process will best position all of Avaya’s businesses for future success.”

Although Avaya had explored a number of options to improve its capital structure, including selling off various assets like its Contact Center business, the company’s board said that selling that business at this time “would not maximize value for Avaya’s customers and all of its stakeholders.” 

Avaya said that it continues to hold negotiations with other unnamed parties to sell off other assets in an effort to maximize stakeholder value.

The vendor reported that fourth-quarter revenue was $958 million, up $76 million from the prior quarter, third quarter of 2016

Avaya said the revenue improvement was the result of increased demand for products. However, revenue declined by $50 million year-over-year due to what the vendor said was lower demand for unified communications hardware.

After being spun out of Lucent Technologies in 2000, Avaya became a private company in 2007 via a deal with Silver Lake and TPG Capital valued at $8.2 billion. In 2009 Avaya acquired Nortel Enterprise Solutions, providing a foothold in the enterprise networking business.