Avaya Holdings Corp. is nearing a chapter 11 bankruptcy filing to restructure its balance sheet as it looks to turn around its business and move past problems surrounding the company’s accounting, the Wall Street Journal reported. Avaya disclosed earlier this week it has reviewed various restructuring proposals from competing creditor groups. One plan, supported by a senior lender group including Apollo Global Management, would significantly reduce Avaya’s debt load through chapter 11, wipe out shareholders and, pending the completion of an internal investigation into controls over financial reporting, provide directors and executives with releases from potential litigation. In August, Avaya said it had launched an investigation while it was “reviewing matters related to potential material weaknesses in the company’s internal control over financial reporting.” Another plan, supported by holders of Avaya’s unsecured bonds, proposes to restructure the company out of court, including by issuing new bonds and loans to retire some old debt. The company in August said there was substantial doubt about its ability to continue as a going concern in light of a debt maturity next year, and disclosed it would miss its third-quarter earnings forecast by more than 60% after closing a deal to issue $600 million of new debt in June. Prices on the newly issued debt tumbled after the disclosure about the earnings, saddling investors with losses.
