News that Avaya Holdings Corp. could imminently file for Chapter 11 bankruptcy protection means that both channel partners and corporate clients are watching anxiously to see what will happen next.
Should a filing end up happening, “part of Avaya’s Chapter 11 filing requires a simplification of their product lines,” Thomas Randall, advisory director with London, Ont.-based Info-Tech Research Group, said today. “Both channel partners and clients are watching for whether parts of Avaya will be sold off (e.g., their contact centre solution) to meet financial objectives, or whether certain products will just reach end of life from lack of R&D investment.”
News of the pending bankruptcy protection plan first broke on Thursday when the Wall Street Journal reported that the “company is reaching a Chapter 11 bankruptcy filing to restructure its balance sheet, in a bid to turn around its business and move past accounting problems.”
Company shares at the end of trading today plunged to US$0.15, from a high share price earlier this year of US$21.65.
According to Randall, “plenty will be attractive to potential buyers of Avaya product lines – Avaya still retains an extremely large customer base. The question will be whether Avaya just remains the paint on a solution powered by another provider, or if the Avaya brand will disappear altogether from a sell-off. RingCentral already powers Avaya’s UCaaS solution – will another vendor (like Microsoft) decide to acquire Avaya’s contact centre solution for ease to market?”
At the end of the day, he added, another concern to be considered is customer experience: “With so many layoffs and an inability to meet certain cloud deployment deadlines, Avaya customers and channel partners may be reaching the point of jumping ship.
“It is a difficult process to modernize from on-premises legacy communications to cloud-based solutions. But, if that move has taken place, the infrastructure now exists for clients to perform a cloud-to-cloud migration. Cloud-to-cloud migration services also present a market opportunity for channel partners to move into.”
Another stumbling block revolves around the fact that confidence among partners will not be high, Randall said: “Having already been through a Chapter 11 journey just five years ago, Avaya had to rally its partners at their 2018 Engage conference.
“Channel partners will now likely be asking, ‘What is different this time? What confidence can I be given that the product lines I am selling will still be here next year? What communication should I be giving my clients?’ At the moment, communication still remains vague and likely will remain so until the filing takes place.”
A Reuters article that followed the Wall Street Journal reporting stated that the company “was in talks with its financial stakeholders regarding a comprehensive resolution to strengthen its balance sheet.”
In a statement issued on Dec. 13, Alan Masarek, Avaya’s chief executive officer (CEO), said discussions with all of the company’s financial stakeholders are taking place, “to enhance our capital structure, increase liquidity and accelerate our investment in innovative products and solutions.”