The business communication systems manufacturer Avaya Holdings went bankrupt. The company filed for bankruptcy under Chapter 11 of the US bankruptcy law, which leaves the company with the right to further restructuring, reports Reuters.

As a result of the restructuring, the company reduced its total debts by more than 75%: from $3.4 billion to $800 million. To implement the plan, the company entered into an agreement with creditors to provide financing in the amount of $780 million.

Avaya is looking forward to finishing the restructuring process in 60-90 days. Furthermore, employees will be paid a salary, the customer servicing and partnerships with business partners will also go on. Evercore Group has become Avaya’s financial consultant in the process of restructuring. 

It is worth noting that in December 2017, Avaya announced the completion of a financial reorganization that allowed the company to emerge from bankruptcy. The vendor reduced the tax burden by $3 billion, and another $300 million is on the company’s balance sheet. By June 30, 2016, Avaya’s debts exceeded $6 billion, and the company had to pay $400 million in interest annually.

In early 2018, Avaya became a public company again – for the first time in 10 years.

About two years ago, Avaya was close to being sold, but in the end, the company settled on a partnership deal. Cloud collaboration developer RingCentral invested $500 million in a partnership with Avaya and paid about $375 million more in stock for product licensing rights and future royalties.

Avaya is now actively moving to a new business model centered around recurring revenue and cloud services. The share of contracts that bring recurring income in the total volume of sales exceeds 70%.