A bankruptcy court approved Mitel’s restructuring plan, which is good news for its channel partners who will continue to get paid by the unified communications vendor.

The channel impact is massive: 88% of Mitel's sales are indirect, and it has 6,000 channel and distribution partners. The financial numbers are also huge. The restructuring plan will eliminate around $1.15 billion of debt and lower Mitel’s interest payments by approximately $135 million per year. Mitel will also gain access to $64.5 million of exit financing to support operations. Mitel filed for Chapter 11 in March.

Emerging from Chapter 11, Mitel follows the path of Avaya and C1, two other vendors that filed for bankruptcy in recent years.

Tarun Loomba

“Approval of our Plan is a major milestone as we near the conclusion of our financial restructuring,” Mitel CEO Tarun Loomba said. “Over the past several months, we have worked diligently to strengthen Mitel’s financial foundation, and we are proud to have done so with the strong support of our employees, partners, customers, and lenders. With a more efficient capital structure in place, we’re well-positioned to accelerate growth and sharpen our focus on delivering flexible, secure, and mission-critical communications solutions. We look forward to completing this process in the near term and to emerging as an even stronger vendor, employer, and business partner—continuing our leadership in hybrid communications for years to come.”

Mitel’s bankruptcy plan should have little immediate impact on partners and customers, although the vendor must avoid running up the type of debt that made the process necessary. It took Mitel’s rival Avaya two bankruptcy filings – in 2017 and 2023 – to steady the ship. After emerging in 2023, Avaya made significant changes in 2024, naming Patrick Dennis to succeed Alan Masarek as CEO and going through two staff layoffs.

C1’s 2024 bankruptcy allowed it to continue without interruption, with the goal of clearing $1.2 billion in debt. However, the vendor said it does not expect to return to profitability until 2027.

Emerging from Chapter 11, Mitel will have a new ownership structure and board of directors. However, FAQs on its website pledge a smooth transition for partners and customers. The channel will be watching closely.