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February 20, 2018
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Updated: Jan. 15 (16:03)

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Avaya Members and Retirees
Updated On: Aug 10, 2017

To our Avaya Members and Retirees 

Update As Of August 10, 2017- RE: Bankruptcy filed on January 19, 2017

Amended Plan of Reorganization Filed.

We’ve learned today that Avaya has filed a plan of reorganization (exit plan), leaving the bargained-for pension intact. We will keep you informed as we receive additional information.

Sincerely, Lisa M. Bolton, Vice President CWA Telecommunications & Technologies

Avaya Inc. Case Summary On January 19, 2017,

Avaya Inc., along with seventeen affiliated companies (collectively, “Avaya”), filed for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Avaya’s bankruptcy proceeding is currently pending under case number 17-10089 (SMB) and being overseen by Bankruptcy Judge Stuart M. Bernstein.

On January 30, 2017, the Office of the United States Trustee for Region 2 formed a seven member official committee of unsecured creditors in Avaya’s bankruptcy case. The Communications Workers of America (“CWA”) serves as an active member of this important committee.

The CWA, along with its bankruptcy professionals, are closely monitoring Avaya’s situation. Currently, the CWA represents the interests of about 463 active workers, about 3,757 retirees and beneficiaries of the Avaya Inc. Pension Plan, and over 15,000 retirees, surviving spouses and dependents receiving retiree health care and other post-retirement benefit obligations from Avaya.

Avaya continues to honor ALL of its obligations under the CWA collective bargaining agreements including severance resulting from certain pre-bankruptcy filing terminations, except that certain lump-sum pension payments must (under certain federal law) be paid in installments as opposed to all at once – but the aggregate amount remains the same.

Avaya’s major issue is, how does it address the billions of dollars it owes to its secured lenders. These lenders fall into two groups: the members of so-called 1L lender group hold a first lien on most of Avaya’s assets and the so-called 2L lender group hold a second lien or a lien that is junior to the lien held by the 1L lender group. On April 13, 2017, Avaya filed its disclosure statement and proposed plan of reorganization with the bankruptcy court. Through its proposed plan, Avaya seeks to covert debt held by its secured lenders to equity and to split the equity interest in the reorganized Avaya entities between the 1L lender group (95%) and 2L lender group (5%). In addition to the equity split, Avaya has stated in court that it intends to address one of its two pension plans. There appear to be no changes to the existing CWA member retiree plan. Avaya and the stakeholders appear to be focused on the salaried plan, which covers approximately 1,000 active employees and 6,900 retirees. Of importance, no CWA represented active employee or retiree participates in this salaried plan. Avaya intends to keep the Avaya Inc. Pension Plan and the CWA represented employees and retirees participate in the Avaya Inc. Pension Plan.

Since Avaya’s announcement that it intends to address the Salaried Plan, Avaya, the Pension Benefit Guarantee Corporation, the federal government agency that provides insurance protection for terminated defined benefit pension plans (the “PBGC”), and the 1L lender group entered into negotiations to address the salaried plan as well as fix the amount of the PBGC’s claim in the bankruptcy case. For background purposes, if a plan is terminated without sufficient money to pay all benefits, the PBGC's insurance program pays a pension benefit up to certain limits set by law. In turn, the PBGC holds a claim in the plan sponsor’s bankruptcy case, here Avaya’s case in an amount calculated in a way designed to cover the shortfall.

On July 25, 2017, Avaya announced that it tentatively reached a deal with the PBGC and the 1L lender group in connection with the salaried plan, and that an amended plan of reorganization will be filed that incorporates the terms of this agreement.

At this time, the 2L lender group disputes the treatment under the plan of reorganization as the 2L lender group claim that they need a better treatment and distribution to address its concerns with Avaya’s proposed plan of reorganization. At this time, the 2L lender group argues that Avaya needs to terminate the CWA pension plan, but right now Avaya and the 1L lender group do not agree. So it is important to be cautious and to please note that Avaya still has the ability under the bankruptcy code to terminate the CWA pension plan; however, this is a complicated process.

A hearing to approve Avaya’s disclosure statement is currently scheduled for August 15, 2017. Approval of Avaya’s disclosure statement is necessary before Avaya can seek to solicit votes on its proposed plan of reorganization.

While we hope for Avaya’s emergence with no change to our CBAs and pension, we still have a ways to go before Avaya emerges from it chapter 11 bankruptcy cases.

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Telecommunications and Technologies represents about 150,000 CWA AT&T Legacy T. Workers Click here to read more about what is going on with Legacy T Nationwide

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