C1 Restructuring Plan Receives Court Approval

A bankruptcy court has approved C1’s restructuring plan, clearing the IT service provider to complete its court-supervised debt-clearing process.

Bloomington, Minnesota-based C1 (formerly ConvergeOne) said it expects to compete the restructuring and emerge from Chapter 11 bankruptcy within weeks.

“We are pleased to have reached this critical milestone, bringing us one step closer to completing this process and moving forward focused as ever on delivering continued excellence for customers and partners,” C1 CEO Jeff Russell said. “We are deeply grateful for the strong support from our financial stakeholders, which has enabled us to achieve this outcome on an expedited basis.”

C1's Jeff Russell

C1 Restructuring Has Stakeholders’ Backing

Most of C1’s lenders and other stakeholders agreed on April 4 to continue to invest during the C1 restructuring. C1 set a goal of reducing approximately 80% of its debt and providing $245 million in new equity commitments to increase its available liquidity. C1 filed a prepackaged Chapter 11 proceeding with the U.S. Bankruptcy Court for the Southern District of Texas to expedite the process. A prepackaged filing requires most of the company’s lenders and stakeholders to agree to support its plans to restructure its balance sheet.

Related:C1 Bankruptcy: $1.8 Billion in Debt, Company Partially Blames Avaya

C1 said it would continue business as normal during the Chapter 11 bankruptcy, including paying vendors in full and continuing to pay employees and deliver full benefits. C1’s bankruptcy filing said it seeks to clear $1.2 billion in debt and projected a return to post-tax profit by 2027.

“We look forward to emerging as an even stronger company with significantly reduced debt levels and a robust liquidity profile, well-positioned to invest in C1’s growth and transformation,” Russell said.

The C1 bankruptcy filing projected non-GAAP income growth through 2028, with income forecasts of $864 million for the rest of 2024, $1.5 billion in 2025, $1.6 billion for 2026, $1.8 billion for 2027 and $1.9 billion for 2028. C1’s projections said it would become profitable before tax in 2026, and profitable after tax in 2027.

C1 reported $1.5 billion in revenue for 2023, which was flat with its 2022 revenue.

According to its filing, the C1 restructuring was required because of three main factors: a highly leveraged capital structure following a series of acquisitions and higher costs as interest rates rose; delays in customer purchasing due to core OEM partner Avaya’s bankruptcy in Feb. 2023; and downgrades in its credit ratings.

C1 acquired seven companies between January 2019 and January 2022.

Related:C1 Files for Chapter 11 Bankruptcy

C1 sells cloud infrastructure, customer experience, cybersecurity, data center, enterprise networking, and unified communications solutions. Its products and services include C1 OnGuard proactive monitoring and analytics and C1 Elly, a generative AI-powered virtual assistant.