MetriNote – Avaya Financial Restructuring Impacts RingCentral Deal

Author: Diane Myers, Principal Analyst February 15, 2023 – Avaya announced its financial restructuring to get itself out from under a load of debt and put its balance sheet in a healthier position. Unlike Avaya’s last Chapter 11 proceedings that took close to a year, this time the company is filing a prepackaged Chapter 11 with strong support from the majority of its lenders at the start. Avaya expects to complete the process in 60-90 days from time of announcement. As part of the restructuring, Avaya has also taken the opportunity to modify its relationship with RingCentral. Up until now Avaya has been purely an agent of RingCentral with its Avaya Cloud Office solution, with clients billing and management residing with RingCentral. This arrangement provided Avaya with little to zero relationship with these clients, primarily net-new customers. With the restructuring Avaya now can sell Avaya Cloud Office to its installed base on a direct basis, maintaining the customer relationship, first line of support, and recurring revenue base. Additionally, with the new arrangement, Avaya plans to build integration between Avaya Cloud Office and Avaya’s own CCaaS solution, Avaya Experience Platform, and its premises-based contact center platform, Elite. As part of the Chapter 11 restructuring, RingCentral’s preferred stock holdings in Avaya will be eliminated.