Avaya Inc. said that a path has been cleared for the telecommunications company to exit chapter 11 protection in an agreement with its senior creditors and the government's pension insurer, Reuters reported. Avaya said that it had backing from holders of more than half of its $4.38 billion first-lien debt and a settlement with the Pension Benefit Guaranty Corp. (PBGC) to terminate its underfunded salaried employee pension plan. The agreements could cut more than $3 billion from the $6.3 billion in debt Avaya had when it entered bankruptcy in January. Avaya had faced challenges in trying to transition to software and services from a business centered on hardware, and failed to sell its call center business. Avaya also struggled with pension obligations. The PBGC has said Avaya's hourly workers plan was underfunded by $660 million and its salaried workers plan was underfunded by $1.24 billion. The Santa Clara, Calif.-based company will pay the PBGC $300 million and give it 7.5 percent of the stock in the reorganized Avaya in return for transferring obligations for the salaried plan to the PBGC, according to court documents.
