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Avaya Sale Procedures Approval Sought

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Avaya filed with the U.S. Bankruptcy Court a motion for entry of (i) an order approving bidding procedures in connection with the sale of the Debtors’ networking business, approving the form and manner of notice, scheduling an auction and a sale hearing, approving procedures for determining cure amounts and extending the deadline to assume or reject the Billerica lease and (ii) an order authorizing and approving the sale of the Debtors’ networking business.

The motion explains, “The Debtors are also requesting approval of a termination fee equal to $3 million (the ‘Termination Fee’) and expense reimbursement of up to $750,000 (the ‘Purchaser Expense Reimbursement,’ and together with the Termination Fee, the ‘Bid Protections’), representing approximately 3.00% and 0.75%, respectively, of the total potential value to Avaya of approximately $100 million….The total potential value includes at least approximately $68 million in cash proceeds (before transaction costs and purchase price adjustments), up to approximately $22 million of aggregate, undiscounted value in the assumption of future dark lease and pension obligations of certain Avaya non-Debtor entities (with any reduction of this amount to be offset by an increase in cash proceeds) by the Stalking Horse Bidder, and the ultimate release of up to $10 million in cash to Avaya from an indemnity escrow account one year after closing.”

In addition, “Pursuant to closing the transaction, Avaya would be responsible for paying up to approximately $5 million in severance costs to employees of the Business not transferred to the Stalking Horse Bidder.” The bid deadline is May 18, 2017, with a May 23, 2017 auction and May 25, 2017 sale hearing to follow. The Court scheduled an April 4, 2017 hearing to consider the bidding procedures motion, with responses due by March 28, 2017.

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