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Channel left sweating as Avaya files for Chapter 11

Plenty of channel names are owed money as unified comms specialist Avaya files for Chapter 11 protection in the US

Avaya's UK channel partners will be keeping a close eye on what happens to the vendor after it filed for Chapter 11 protection.

It is possible for firms that enter the US equivalent of bankruptcy to come out the other side stronger and many in the channel will be hoping that the investments they have made in skilling up and backing the vendor will not have been in vain.

Avaya announced that it had started the Chapter 11 process and would be rebalancing its balance sheet, "to better position itself for the future".

Plenty channel names are caught up in the mess which is inevitable given the global size of the indirect partner base, which stands at 6,500 as of 30 September last year, which accounted for 74% of product revenues in fiscal 2016.

Avnet is close to the top of the list of those owed with $8.8m in unsecured debt. Other's sweating over the Chapter 11 process include HPE, Salesforce, IBM, Infosys, World Wide Technology and Red Hat.

The vendor has promised that it will emerge from the current process stronger.

“This is a critical step in our ongoing transformation to a successful software and services business. Avaya’s current capital structure is over 10 years old and was put in place to support our business model as a hardware-focused company, which has evolved significantly since that time. Now, as a result of the terms of Avaya’s debt obligations and the upcoming debt maturities, we need to recapitalize the Company," said Kevin Kennedy CEO of Avaya.

“Our business is performing well, and we are confident that we can emerge from this process stronger than ever, as this path is a reflection of our debt structure, not the strength of our operations or business model.  Pursuing restructuring through chapter 11 will enable us to reduce Avaya’s debt and interest expense, while providing increased financial flexibility to further invest in innovation and growth to enhance our market-leading competitive position," he added.

Kennedy also had some words of comfort for the channel: "Most importantly, we are keenly focused on minimizing disruption to our customers, partners, and employees and do not expect to experience any material disruptions during the chapter 11 cases.”

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