Everyone is talking about the Avaya Bankruptcy and what it means for the future. No Jitter had a very interesting piece on the bankruptcy that we thought was worth sharing: Avaya Bankruptcy: Good or Bad for Customers?
The author, Phil Edholm, believes that the speed of the bankruptcy process is of great importance. He compares the bankruptcies of Nortel, which was a long and painful process, and that of Aspect, who reached a much quicker conclusion.
Edholm explains that “Chapter 11 is designed to enable continued operations and return to normal business (versus the total liquidation of Chapter 7), creditors have claims to all of a company’s assets and cash. Those claims can prolong the bankruptcy process, and often lead to liquidation, which is what happened in the Nortel case.”
On the other hand, Aspect was able to avoid this by securing the support of creditors and developing a plan before filing.
Reports from Avaya indicate that they do not have a plan and are only beginning the process of negotiations.
With the outlook looking so uncertain, this seems to distract from the essential issue – why did they get into this position in the first place?
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