Avaya has reportedly discussed a plan with lenders that could see them take control of the company as part of a bankruptcy filing.

According to sources familiar with the matter, the Chapter 11 filing, which allows a company to keep operating while working out a plan to repay creditors, could come as soon as the end of the month.

The lenders in question include Apollo Global Management, Ares Management, and Invesco. The sources also said that Avaya has started discussions about potential debtor-in-possession financing to help fund the company while in bankruptcy.

Plans could change

Avaya, Apollo, and Ares have all declined to comment on the situation, and messages left with Invesco by Bloomberg were not returned.

Last month, Avaya revealed it had received multiple restructuring proposals from creditor groups. Some pushed the company to restructure via bankruptcy, while others wanted Avaya to stay out of court. A potential Chapter 11 filing could open the door to litigation from certain investors who have seen their investments plunge.

According to the sources, many holders of the company’s convertible notes have opted not to enter into confidential talks with the company to preserve their rights to pursue litigation against management and directors if the company lands in bankruptcy court.

Bankruptcy trouble

It’s worth noting that Avaya previously filed for bankruptcy in 2017. The company’s financial struggles have been well-documented, and it remains to be seen how this latest development will play out. The talks are ongoing and plans could change.

Tip: Avaya’s share price drops 45 percent due to doubtful outlook