Yesterday, Avaya filed a liquidation analysis document with the Court, "in the event that they hypothetically convert to Chapter 7" Overview is below. You can read the entire document on Prime Clerk. I can assure you that this is not standard procedure in cases where the creditors and the debtor are actively working toward a restructuring agreement. This happens when negotiations break down and they're preparing for the worst.
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Overview:
This Liquidation Analysis1 has been prepared assuming that the Debtors hypothetically convert their chapter 11 cases to undertake a liquidation under chapter 7 of the Bankruptcy Code as of September 30, 2017 (the “Conversion Date”). Except as otherwise noted herein, the values reflected in Liquidation Analysis are based upon the Debtors’ unaudited books and records as of February 28, 2017, and those values are assumed to be representative of the Debtors’ assets and liabilities as of the Conversion Date. It is assumed that the Bankruptcy Court would appoint a chapter 7 trustee (the “Trustee”) on the Conversion Date to oversee the liquidation of the Debtors’ Estates, during which time substantially all of the Debtors’ assets would be sold, abandoned, surrendered, or otherwise liquidated, as applicable, and the cash proceeds, net of liquidation-related costs, would then be distributed in accordance with applicable law.
This Liquidation Analysis has not been examined or reviewed by independent accountants in accordance with standards promulgated by the American Institute of Certified Public Accountants. Although the Debtors consider the estimates and assumptions set forth herein to be reasonable under the circumstances, such estimates and assumptions are inherently subject to significant uncertainties and contingencies beyond the Debtors’ control. Accordingly, there can be no assurance that the results set forth by this Liquidation Analysis would be realized if the Debtors were actually liquidated pursuant to chapter 7 of the Bankruptcy Code, and actual results in such a case could vary materially from those presented herein, and distributions available to Holders of Claims and Interests could differ materially from the projected recoveries set forth by this Liquidation Analysis.