C1 Files for Chapter 11 Bankruptcy

Updated April 4

C1 (formerly ConvergeOne) confirmed it has filed for Chapter 11 bankruptcy and is restructuring its balance sheet with the help of its largest investors.

The prepackaged Chapter 11 filing will allow Bloomington, Minnesota-based C1 to work out a court-approved plan to repay its debt while remaining in business. Prepackaged Chapter 11 filings are designed to help companies emerge quickly from bankruptcy and pay their vendors in full.

C1 issued a press release confirming details that Channel Futures previously reported concerning its debt reduction moves.  C1 said it has entered into an agreement with most of its stakeholders, including its largest investor, private-equity company CVC Capital Partners. Silver Point Capital, and Monarch Alternative Capital are among the others that have committed new equity and debt financing.

The agreement will reduce approximately 80% of debt from the C1 balance sheet and $245 million in new equity commitments, resulting in a significant increase in the company's available liquidity.

“Over the past year, we have been taking actions across the organization to help position C1 for success in the market and harness the full value of 'One C1,'” said C1 CEO Jeffrey Russell. “To support our ongoing efforts and ensure the company has a strong financial foundation for the future, C1 is proactively taking steps to reduce our debt levels, strengthen our overall liquidity profile and, in turn, invest in near-term growth and grow market share."

Related:Executive Promotions to Fuel ConvergeOne Growth

ConvergeOne's Jeffrey Russell

C1 sells IT, communications and collaboration solutions to enterprise customers. Its focus areas include cloud, security and networking.

An S&P Global Ratings report downgraded ConvergeOne last September, claiming it has struggled with industry-wide supply chain problems, higher than expected interest rates and free operating cash flow problems.

Weeks after the S&P downgrade, ConvergeOne hired former Intelisys president John DeLozier as chief revenue officer. ConvergeOne rebranded as C1 in November. At the time, Channel Futures reported the company had 10,000 customers and 5,600 technical certifications held by thousands of engineers.

The restructuring news comes less than two weeks after C1 promoted Meghan Keough to chief marketing officer and Tamara Shaw to chief transformation officer. Also last month, it launched a generative AI-powered assistant called C1 Elly that helps organizations use voice and digital data across applications, freeing them from traditional siloed CRM, ERP and ITSM systems.

Related:ConvergeOne Hires John DeLozier Just Weeks After Sudden Intelisys Departure

C1 lists Avaya, AWS, Cisco, Genesys and Palo Alto Networks as core partners, and Dell, Extreme Networks, Juniper Networks, Microsoft, and Zoom as growth partners.