For the second time in six years, Avaya has filed for Chapter 11 bankruptcy. The company has positioned this move as broadly supported by its financial stakeholders, short term, and necessary for the company to move forward on its product, solution and services investments. Avaya was delisted from the New York Stock Exchange (NYSE) this morning.

This is a prepackaged bankruptcy to restructure the company’s debt and balance sheet. Avaya will be securing roughly $780 million in committed financing and vendors, suppliers, and employees will all be getting paid as usual.

These actions will result in Avaya eliminating more than 75% of its debt. Additionally, the move will increase Avaya’s cash and strengthen its liquidity position, resulting in an expected emergence balance sheet with less than 1x net leverage.

Avaya CEO Alan Masarek balanced optimism and realism during a briefing this morning, and was open about the actions being taken. “The point of having to do this is if we have not cleaned up the cost structure and balance sheet, we didn’t do our job. What I’m trying to do is turn the page and get the entire industry and all our employees, thinking about the new Avaya. If we don’t execute, we all go home.”

On a more positive note, according to Masarak, the company is moving from being poorly capitalized to having one of the strongest balance sheets in the industry.

Another positive development shared today was the company’s extension and expansion of its partnership with RingCentral. Avaya will continue to act as the exclusive sales agent for direct and partner sales of Avaya Cloud Office and the partnership has also expanded to include additional go-to-market strategies that will enable Avaya to sell Avaya Cloud Office to its installed base directly. Also, Avaya will be compensated in cash as Avaya Cloud Office seats are sold and, in connection with the financial restructuring, RingCentral’s preferred stock in Avaya will be eliminated.

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Its been a rough February for Avaya, with the filing of a lawsuit from bondholders, accusing the company of misleading investors. Masarek worked to tamp down worry on legal proceedings, and emphasized there was no fraud taking place at Avaya.

The company is being transparent about actions being taken and the challenges faced. Avaya has been working to move from being a legacy hardware provider to a cloud solutions provider, but it has been a slow progression.  

From a CX perspective, in its December briefing Avaya presented some solid strategy and planning for its Experience Platform, including its cloud-based Contact Center as a Service (CCaaS) offering. Avaya’s Experience Platform works to connect customer service across all touchpoints, a must have in the digital transformation of customer interactions. The platform offers features such as AI speech and analytics, attribute engagement tools, automation, and self-service.

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The challenge here for Avaya is that there is a lot of competition in the cloud CX market, and the company seems to be playing a bit of catch up. Avaya specifically called out accelerating investment in the Avaya Experience Platform in the restructuring announcement. This push will be needed for the company to craft a compelling solution in this increasingly crowded and well-entrenched competitive landscape.