Avaya Appoints New CEO And Plans To Emerge From Bankruptcy As A Public Company

Avaya CEO Kevin Kennedy is stepping down after eight years of running the unified communications specialist as the company prepares to exit Chapter 11 bankruptcy protection this fall. Taking the baton from Kennedy is Avaya's current chief operating officer and global sales leader Jim Chirico, who has been with Avaya since 2008.

"I'm excited to have the opportunity to lead Avaya at a critical point in its history," said Chirico, in a statement. "We will enter this next chapter with unique strengths and a new capital structure, and I look forward to working with the talented Avaya team to accelerate our long-term success."

Avaya said Kennedy is retiring and will officially step down from his CEO and board member role on October 1. He will remain an advisor to the company.

[Related: RingCentral CEO Scoffs At Mitel-ShoreTel Acquisition; Talks Winning Over Top Avaya Partners And $1B Sales Goal]

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"It's been an honor to serve as Avaya’s CEO, especially working with our outstanding and committed employees, partners and customers," said Kennedy, in a statement. "The industry has shifted significantly over the last several years … I'm confident [Chirico] has the knowledge, experience and skills to help Avaya effectively serve our customers, grow, continue the company’s spirit of innovation and capture even more market share."

Dan Silverman, president of Telanet, a Toronto-based solution provider and Avaya partner, said he has high hopes with Chirico taking the leadership role.

"Kevin did a good job transitioning the company from a hardware vendor to set the table for the next generation of Avaya. If you're making changes, you need some fresh blood at the top. You need a guy like Chirico that comes out of the sales side. Kevin was an engineer. Having a sales leader come in that can really continue to sell the value of Avaya is great news for partners."

Silverman said his Avaya business hasn't slowed down since Avaya's Chapter 11 filing in January.

"Avaya's number continue to do better than expected. It shows that despite everything, there is still confidence in the product. That's the same message that's been drilled down since the Chapter 11 happened, which is, 'This Chapter 11 isn't about our product set. It's not about the quality we deliver. It's about a debt that we inherited,'" said Silverman.

In 2007, Avaya was acquired by the private equity firms TPG Capital and Silver Lake Partners for $8.2 billion. Avaya said it had taken the initial steps to enable the company to emerge from Chapter 11 as a public company.

"When you look at the fact that they're going to come out as a public company, so now they're going to go head-to-head with Mitel-ShoreTel, with Cisco and all the other players out there, I think is good," Silverman said. "Those that predicted Avaya's doom and gloom – I don’t see that happening."

Santa Clara, Calif.-based Avaya filed for Chapter 11 bankruptcy protection in January. The vendor later revealed a reorganization plan in April with a strategy to address its $6 billion in debt. In July, Avaya sold its networking business to Extreme Networks for $100 million.

On Aug. 7, the company said it entered into a Plan Support Agreement with holders of over 50 percent of its first lien debt, while also reaching a separate agreement with the U.S. Pension Benefit Guaranty Corporation, in moves that would reduce Avaya's debt by more than $3 billion, according to the vendor.

"We are very pleased to have reached these agreements," said Kennedy. "This is an important milestone in the Chapter 11 process and marks Avaya's progress toward our goal of emerging a stronger, more competitive company."

"It is encouraging to see Avaya make progress in this process and move closer to emerging from the bankruptcy," said Jeff Gardner, CEO of Carousel Industries, an Exeter, R.I.-based solution provider, and top Avaya partner. "I’m happy to see Avaya make changes in their effort to drive a positive outcome in the marketplace."

There is a scheduled court hearing for the Avaya agreements set for Aug. 23. If approved, the company hopes to set a date for Avaya to resume business outside of bankruptcy protection with hopes to emerge from Chapter 11 this fall.

Chirico has held a variety of executive sales positions since joining Avaya in 2008. Before joining Avaya, he was executive vice president of global operations development and manufacturing at Seagate Technology.