Mitel Networks files for Chapter 11 bankruptcy

May 2025 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

May 2025 Issue

Mitel Networks Corporation filed for Chapter 11 in the US Bankruptcy Court for the Southern District of Texas on 10 March, in order “optimise its global operations and drive profitable and predictable growth”.

The bankruptcy filing, which came after days of speculation over the company’s future, has been undertaken as the company looks to right size its existing debt pile. To that end, the company’s restructuring plan, which has the support of the majority of its existing lenders, will result in its balance sheet being deleveraged by around $1.15bn, reducing annual cash interest costs by around $135m. The company listed assets and liabilities of $1bn to $10bn each in its petition.

Canada-based Mitel provides communication services including business phones and call centres and competes with the likes of Cisco Systems Inc. and Avaya Inc. It had 75 million users in 2023, according to a press release. The company was acquired by private equity firm Searchlight Capital Partners in an all-cash $2bn deal in 2018, a move that the company said would facilitate its strategy to further develop cloud services.

To facilitate the bankruptcy process Mitel has secured a commitment for $60m in debtor-in-possession financing from one group of lenders, along with its existing working capital, pending court approval. It also has a commitment for $64.5m in new exit financing once the restructuring plan is complete that will support its operations going forward.

According to a statement announcing the filing, Mitel will continue to operate in the ordinary course throughout its financial reorganisation process, fulfilling its go-forward commitments to customers, partners and other stakeholders. With support from its ad hoc group of senior lenders and other key stakeholders, Mitel expects this to be a swift, streamlined process with minimal disruption to customers, employees, vendors or partners.

Filing for Chapter 11 will enable Mittel to invest in its long-term business strategy as it looks to be the leader in unified communications, addressing the increased demand for hybrid communications solutions by new and existing enterprise customers in the most demanding industries and geographies, while also continuing to support more than 70 million users with customers in over 100 countries.

“For over 50 years, Mitel has pioneered and adapted to the ever-changing communications industry, shaping how organizations worldwide connect and communicate,” said Tarun Loomba, chief executive of Mitel. “We are confident the steps we are taking to optimize 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.

“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,” he added.

The company’s reorganisation plan concerns only the US, Canada and select UK business segments. It will not impact the broader global business, which will operate in the “normal course”.

However, the filing does mark a significant milestone in Mitel’s strategy pivot, with the restructure of its capital aiming to prioritise the “hybrid communications market opportunity”. A hybrid communications model allows businesses to keep critical infrastructure on-premise and layer software as a service innovation over the top. Mitel increasingly offers such services through first-hand innovation and new partnerships, including those recently announced with Genesys and Zoom.

Mitel is the latest company in the communications space to file for Chapter 11. Both Afiniti and Avaya entered bankruptcy protection in recent years.

Richard Summerfield