IT firm, Avaya Holdings Corp (NYSE:AVYA) is approaching a chapter 11 bankruptcy file to reorganize its balance sheet in an effort to turn around its company and get beyond accounting issues, according to the Wall Street Journal.
A Reuters’ inquiry for comment received no immediate response from the business. According to the Journal’s article, which cited persons with knowledge of the situation, Avaya had stated that there was significant uncertainty over its ability to continue as a going concern in light of a debt due next year.
It stated earlier this week that it was in discussions with its financial stakeholders on a thorough answer to improve its balance sheet.
According to a Journal report, one plan backed by a senior lender group that includes Apollo Global Management would significantly reduce Avaya’s debt load through bankruptcy, wipe out shareholders, and release directors and executives from potential legal action while an internal investigation into controls over financial reporting is ongoing.
Another strategy backed by the holders of Avaya’s unsecured bonds, calls for the firm to be restructured outside of court, including by issuing new bonds and loans to pay off part of the company’s existing debt.
Avaya’s market valuation has decreased from over $2 billion to just over $45 million as a result of the approximately 97% decline in its share price this year.
It’s expected that Avaya Holdings Corp (NYSE: AVYA) will declare bankruptcy under chapter 11. Avaya stated earlier this week that it is taking restructuring suggestions from creditor parties under consideration. The business expressed doubts about sustaining operations in August. Due to the inquiries into its balance sheets, the firm did not publish an earnings report for the second quarter and stated that it would not submit an annual report either.
Avaya previously filed for chapter 11 bankruptcy five years ago, and it was successfully discharged over a year later. According to the article, the business hired the legal firm Kirkland & Ellis LLP and turnaround consultant AlixPartners LLP to aid in the investigation of restructuring possibilities.