Mitel claims its Chapter 11 process will be “too short” for efforts by rivals to sow fear, uncertainty and doubt (FUD) to be effective.
Having filed for Chapter 11 bankruptcy protection on 9 March, the unified comms vendor yesterday published a detailed FAQ designed to answer any questions customers, partners and suppliers may have about the process.
Mitel’s key message is that it will “operate as usual” throughout the “one-to-two-month” financial restructuring process.
“Mitel is open for business,” it said in the FAQ.
Talking to IT Channel Oxygen earlier this week, James Banks, Group Technical Director at Mitel Platinum partner Charterhouse, said he is already seeing “the usual suspects” use Mitel’s Chapter 11 as “a lever to push existing users of Mitel towards their own solutions”.
In the partner section of its Q&A, Mitel claimed the process would be too brief for such efforts to be successful, however.
“We understand that competitors may try to encourage fear, uncertainty, and doubt (FUD) during this time,” it said.
“We expect the process to be too short for current customers to make major decisions to change their communications solutions. To minimise disruption, we are focused on clear and regular communications and will leverage the strong relationships between Mitel and our partners, and you and our customers.”
“This is not a liquidation”
In the FAQ, Mitel acknowledged that it had been carrying an “untenable debt load”, and that this impacted its ability to “fully capitalise on profitable areas of the business”.
The Chapter 11 process is designed to deleverage Mitel’s balance sheet to the tune of around $1.15bn.
With rival Avaya having twice successfully emerged from the process in the last eight years, Chapter 11 will be a familiar term for many in the comms industry.
Mitel was, however, quick to dispel any misconceptions that it is going out of business.
“We understand that the terms Chapter 11 and bankruptcy may have a negative connotation,” it wrote in the FAQ.
“This is not a liquidation or what you might think when you hear the word “bankruptcy.” Chapter 11 differs from other global bankruptcy processes. In the US, Chapter 11 is a structured, court-supervised process that allows a company to operate in the ordinary course and meet stakeholder obligations while it works to resolve capital structure challenges. This is one tool that companies can use to address capital structure challenges, and in our case, we’ve determined it to be the most efficient path forward.”
In a LinkedIn post, Charterhouse’s Banks welcomed the FAQ.
“Kudos to Mitel for providing clear and timely communication over the course of this week as they navigate some tricky waters – enabling their partner community to do the same in turn for our collective customers,” he said.
