Payment to begin soon?

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Payment to begin soon?

Postby remberger » Tue Aug 07, 2018 5:43 pm

Hi everyone,

I thought you might be interested in the following:

Avaya just submitted docket 2145, requesting that Judge Bernstein deny SAE Power's request for a stay. The following is from that docket:

PRELIMINARY STATEMENT
1. Nineteen months after they filed their Chapter 11 petitions, and more than seven months after they emerged from Chapter 11, the Debtors stand ready to make a sizable distribution to the more than 1,200 unsecured creditors to the Debtors’ estates by the end of this quarter. To be in this position, the Debtors have worked with creditors, both cooperative and uncooperative, to resolve a multitude of disputes so that unsecured creditors can receive their distributions and the Debtors can move on from these proceedings in their reorganized forms.

It looks like Avaya could start paying us soon if the Judge denies SAE Power's request for a stay.

Stay tuned for more.

Best wishes to all.

Bob
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Re: Payment to begin soon?

Postby vchenu » Tue Aug 07, 2018 6:38 pm

Bob,

Thanks again for your diligence in following up on all the up, down and sideways this took

Ginny
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Re: Payment to begin soon?

Postby financegrunt » Wed Aug 08, 2018 6:56 am

Bob, a question for you.

At one point, the General Unsecured Recovery Cash Pool totaled about $57.7M to cover $305M of General Unsecured Claims or 18.9%.

With the recent $10M settlement between Avaya and Lucent (a claim related to asbestos liabilities) and other settlements, in your opinion, is the available General Unsecured Recovery Cash Pool total now down to no more than $45M (+ or -) a potential recovery of about 14.8% (+ or -)?

Thanks!
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Re: Payment to begin soon?

Postby remberger » Wed Aug 08, 2018 8:14 am

Hello Finance Grunt,

There is a common misconception that when Avaya announces a settlement, like the one from Nokia/Alcatel/Lucent, that the money comes out of the $57 million fund. I believe that is incorrect. My understanding is that settlements (such as the Nokia settlement) set the value of the claim that goes into the $305m total pool of claims. The payout ratio is only impacted to the extent that Avaya made a bad estimate when it guessed at the $305m value of all claims. If Avaya estimated the claim at $0, then the pool of claims would go to $315m, all other claims being equal. The payout ratio might drop by a 10th of a percent (I did not do the math). On the other hand, if they estimated $20m, then the pool of claims would decrease to $295m and the payout ratio might actually increase.

Avaya has never disclosed what the individual claim estimates are that make up the $305m. It would be against their interests (and ours) to do so. If they disclosed the individual estimates, each creditor would negotiate against their estimate and that would give each creditor an advantage in the negotiation process.

If it gives you any comfort, some retirees with high claims have received offers to buy their claims at rates of 18% with no contingencies. Clearly the companies making those offers would be foolish to do so if the $57m payout pool had already been diminished by the Nokia/Alcatel/Lucent settlement.

I hope this helps.

Bob
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Re: Payment to begin soon?

Postby financegrunt » Wed Aug 08, 2018 9:06 am

Hi Bob,

Your observations and points are well taken and most welcome.

Once again, on behalf of all impacted Avaya retirees, thank you for your due diligence and for bringing some clarity to a rather complex (and confusing) legal proceeding.

Finance Grunt
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Re: Payment to begin soon?

Postby mdimov » Wed Aug 08, 2018 9:42 am

Removing a duplicate post...
Last edited by mdimov on Sun Oct 14, 2018 5:23 pm, edited 1 time in total.
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Re: Payment to begin soon?

Postby mdimov » Wed Aug 08, 2018 9:42 am

Bob,
Thanks for your diligence and info sharing! Looking forward to something, I guess!
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Re: Payment to begin soon?

Postby remberger » Wed Aug 08, 2018 11:00 am

I received a private question, which follows. I thought that others might have the same question.

Dear Mr. Remberger,
I have a really STUPID question. What is the supplemental pension? Is there something other than the pension I am receiving? I have read through much of the posts on this web site and I am confused.

Reply:There are no stupid questions. Yours is insightful. If you do not have a supplemental pension, that is good for you.

Some retirees, (particularly those who retired early or took advantage of the various retirement offers), had pensions that were higher than the PBGC would insure when they were offered. By law, if your pension exceeded the cap at the time of retirement, Avaya had to split your pension into a qualified pension and a supplemental pension. The qualified pension was insured by the PBGC, the supplemental pension was uninsured. The total amount of the two pensions was exactly what you earned according to the pension funding formula.

When Avaya went bankrupt, the PBGC assumed responsibility to paying the qualified pension (up to the current limits of the guarantee) and the supplemental portion became another unsecured claim against Avaya. These claims had a very low priority relative to bond holders and other secured creditors. Avaya had to estimate the present value of the supplemental pension (i.e. what would be a "fair" lump sum equivalent. People with supplemental pensions will probably get between 19% and 20% of the value Avaya calculated for the lump sum.

To make it even more complex, some of the qualified pensions exceeded today's PBGC maximum. Those pensions were cut to the current maximum with no recourse to claim anything from the unsecured creditor pool.

Bob
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Re: Payment to begin soon?

Postby ahretirement » Wed Aug 15, 2018 2:16 pm

Robert,

If I'm reading today's docket item #2155 correctly, it appears that Judge Bernstein has denied SAEs motion for a stay of estimation order pending appeal. Does this clear the way for the GUC to begin payouts to general unsecured creditors? Or are there still other large creditors seeking special consideration?

As always, thank you for your insight on these matters.

John Lawrence
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Re: Payment to begin soon?

Postby remberger » Wed Aug 15, 2018 2:29 pm

Yesterday, August 14, Judge Bernstein denied SAE Power's request for a stay of his order estimating the value of their claim. (Good for us). If Avaya stays true to its filing in docket 2145, we should begin to get a "sizable" portion our settlement this quarter.

Bob Emberger
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