Dive Brief:
- Avaya, a communications vendor, declared its completion of a debt restructuring, successfully pulled itself out from a chapter 11 bankruptcy and transitioned to a publicly traded company, according to a company announcement on Friday. The company's debts were reduced by about $3 billion after less than a year of declaring bankruptcy.
- About two weeks prior to announcing its exit from bankruptcy, Avaya was confirmed its "second amended chapter 11 plan of reorganization" by the U.S. Bankruptcy Court for the Southern District of New York, according to the company.
- In addition to restructuring its financial stature, Avaya named Shefali Shah as chief administrative officer to oversee the worldwide law department and global human resources organization. She has experience in "[navigating] the transition from private to public," a process Avaya recently underwent.
Dive Insight:
Avaya filed for bankruptcy in January despite "strong financial results," according to John Sullivan, CFA, VP and corporate treasurer for the company. At the time, the company said the filing would ultimately help its transition from a hardware company to a software and services company.
The company's original business model was structured to support hardware-based operations, but as modernization is underway for most businesses, Avaya needed to adapt. Avaya's successful emergence from bankruptcy proves that while technology sometimes moves faster than its vendors, it is still possible to provide the services rooted in its core business model.
The communication market continues to change as businesses look to embrace more flexible solutions. And while Cisco managed to embrace the cloud and modernization much quicker than Avaya, time will tell if the company can a continue coordinated strategy.
