Mitel has confirmed that it has filed for voluntary Chapter 11 bankruptcy to “optimise its global operations and drive profitable and predictable growth”.
Mitel has announced an agreement to restructure its debt with a group of its senior lenders, some junior lenders, and other key stakeholders. To carry out the reorganisation, Mitel and some of its affiliates have started soliciting approval for a joint prepackaged reorganisation plan and have filed voluntary petitions under Chapter 11 of the US Bankruptcy Code in the Southern District of Texas.
Initially reported last week, Mitel assures customers and partners that its “global business will continue to operate in its normal course” during the financial reorganisation and that vendors are expected to be paid in full. As part of the Chapter 11 process, Mitel is seeking approval to continue paying employees’ salaries and benefits in full.
Backed by the Ad Hoc Group and other key supporters, the company says it expects the process to be swift and efficient, stressing minimal disruption to customers, employees, vendors, or partners.
“For over 50 years, Mitel has pioneered and adapted to the ever-changing communications industry, shaping how organisations worldwide connect and communicate,” said Tarun Loomba, Chief Executive Officer of Mitel.
We are confident the steps we are taking to optimise our capital structure will make us a stronger company primed for efficient and sustainable growth. Our strengthened capabilities at the end of this process will ensure our ability to continue to support customers and partners with innovative solutions, incorporating emerging technologies and meeting their evolving needs for secure, reliable communications solutions for years to come.”
Mitel has secured $60 million in debtor-in-possession (DIP) financing to support its restructuring. Once approved, it says it will use this and existing working capital to maintain daily operations. Additionally, the company has arranged $64.5 million in exit financing to fund its future operations. The restructuring will reduce Mitel’s debt by $1.15 billion and lower annual interest expenses by $135 million.
The Chapter 11 filing does not include Mitel’s operations outside the US, Canada, or certain business segments in the UK.
Mitel emphasises that restructuring its finances will allow the company to invest in its long-term strategy to be a leader in UC. The company—which acquired Atos’s UC arm, Unify, in 2023 and recently unveiled major partnerships with Zoom and Genesys—outlines its aim to meet the growing demand for hybrid comms solutions from both new and existing enterprise customers.
“We look forward to becoming an even stronger vendor to our customers through this process, better positioned to power their most meaningful connections and to address the increasing preferences for hybrid communications solutions globally,” added Loomba.
