Avaya (NYSE:AVYA) stock is falling hard on Friday following reports that the company is closing in on a bankruptcy filing.
According to these recent reports, insiders at Avaya have concerns about the company’s upcoming debt maturity next year. This is backed up by Avaya saying earlier this week it was speaking with financial stakeholders to strengthen its balance sheet.
Currently, there are two factions fighting over how to reorganize the company. There are those pushing for it to undergo a restructuring through a Chapter 11 bankruptcy filing, and another group that believes it can be done out of court.
Private equity firm Apollo Global Management is reportedly on the side of a bankruptcy filing, as are senior leaders at Avaya. However, holders of Avays’s unsecured bonds would rather issue new bonds and loans while retiring some of its prior debt, Reuters notes.
AVYA Shareholders Aren’t Happy About the Report
That makes sense considering any bankruptcy filing could result in the company no longer being listed on public exchanges. And with that in mind, it makes sense that we’re seeing investors abandon ship and sink the stock today.
As of this writing, heavy trading has some 22 million shares on the move. That’s a massive jump from its daily average trading volume of about 5 million shares. This has AVYA stock down 61.5% as of Friday morning. The stock’s also down 99% year-to-date.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.