A Texas bankruptcy judge has granted Mitel Networks Corp. preliminary approval to access $60 million in debtor-in-possession (DIP) financing, providing the embattled communications software company with a financial lifeline as it navigates its Chapter 11 restructuring.
The ruling, issued by U.S. Bankruptcy Judge Christopher M. Lopez during a brief hearing on Tuesday, allows Mitel to tap into the funds as it pushes forward with a prepackaged bankruptcy plan, slated for an April hearing.
A $1.3 Billion Debt Crisis and the Road to Recovery
Mitel, a Canada-based provider of business communications software, hardware, and services, filed for Chapter 11 protection on Monday, citing $1.3 billion in secured debt. The company pointed to rising competition and the pandemic-driven shift to remote work as key factors behind its liquidity crisis.
In a bid to regain financial stability, Mitel negotiated a restructuring support agreement with a supermajority of its secured lenders, paving the way for a deal that would erase $1.15 billion in debt by converting all existing secured debt into equity.
“It’s never an easy pill to swallow, equitizing that much secured debt, but it’s a necessary pill,” said Adam Shpeen, counsel for the ad hoc group of secured lenders, during the hearing.
