Struggling with the transition to a software-driven world, Avaya filed for Chapter 11 bankruptcy protection today.
The company has $6 billion in debt, the residue of having gone private in 2007. But more importantly, Avaya officials believe the company just isn’t built to compete in the future of IT.
“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,” CEO Kevin Kennedy said in a prepared statement.
Citibank has committed to $725 million in debtor-in-possession financing for the company to help with liquidity during the restructuring. That financing is subject to court approval.
Selling a part of the business would be another option to raise cash, but Avaya seems opposed to that right now. Specifically, the company notes that it’s decided against selling its Contact Center business for now.
An event like this has been anticipated for months. In May, Fortune reported that the company’s owners — private equity firms Silver Lake Partners and TPG Capital — were considering a sale of the company, at a likely price between $6 billion and $10 billion.
In November, The Wall Street Journal reported that Avaya was considering bankruptcy.
Fx is partly based on Fabric Connect, an Ethernet fabric based on the shortest-path bridging (SPB) protocol, which was championed by Nortel in the mid-2000s. SPB was one of a few attempts around the industry to improve Ethernet’s ability to scale, and it became part of the Avaya story when the company acquired Nortel’s enterprise division for $900 million in 2009.
Though Avaya has credible technology, it’s struggled to compete against larger SDN players. An SDxCentral survey of end users, published in the 2016 Network Virtualization and SDN Controllers Report, found that only 5 percent had considered Avaya for network virtualization.