UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK. Case No (SMB) (Jointly Administered)

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1 Pg 1 of 11 Motion to Compel Avaya to Disclose Methodology and Factors Used in Calculating its Value for the Supplemental Pensions of Avaya Retirees ROBERT EMBERGER Creditor, Retiree from Avaya 1032 Resolution Drive Bethlehem, PA Telephone: (484) s: remberger@live.com Filing PRO SE UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: Chapter 11 Avaya Inc., et al., 1 Case No (SMB) Debtors. (Jointly Administered) 1 The Debtors in these chapter 11 cases include, along with the last four digits of each Debtor's federal tax identification number, include: Avaya Inc. (3430); Avaya CALA Inc. (9365); Avaya EMEA Ltd. (9361); Avaya Federal Solutions, Inc. (4392); Avaya Holdings Corp. (9726); Avaya Holdings LLC (6959); Avaya Holdings Two, LLC (3240); Avaya Integrated Cabinet Solutions Inc. (9449); Avaya Management Services Inc. (9358); Avaya Services Inc. (9687); Avaya World Services Inc. (9364); Octel Communications LLC (5700); Sierra Asia Pacific Inc. (9362); Sierra Communication International LLC (9828); Technology Corporation of America, Inc. (9022); Ubiquity Software Corporation (6232); VPNet Technologies, Inc. (1193); and Zang, Inc. (7229). The location of Debtor Avaya Inc.'s corporate headquarters and the Debtors' service address is: 4655 Great America Parkway, Santa Clara, CA

2 Pg 2 of 11 Motion to Compel Avaya to Disclose Methodology and Factors Used in Calculating its Value for the Supplemental Pensions of Avaya Retirees PLEASE TAKE NOTICE that on 8 September 2017, attorneys for Avaya filed Docket 1104, FIRST AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION OF AVAYA INC. AND ITS DEBTOR AFFILIATES and Docket 1106, DISCLOSURE STATEMENT FOR THE FIRST AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION OF AVAYA INC. AND ITS DEBTOR AFFILIATES. PLEASE TAKE FURTHER NOTICE that on 8 September 2017, attorneys for Avaya filed Docket 1103, NOTICE OF HEARING TO CONSIDER CONFIRMATION OF THE CHAPTER 11 PLAN FILED BY THE DEBTORS AND RELATED VOTING AND OBJECTION DEADLINES, and that filing specifies key dates including 27 October 2017 as the voting deadline, 1 November 2017 for Plan Objections and 15 November 2017 for commencement of the Confirmation Hearing. WHEREAS Avaya has not disclosed the methodology and common factors used to value my Supplemental Pension or the Supplemental Pension of any of the 830 Avaya retirees who have Supplemental Pension claims, and WHEREAS, at a hearing on 5 October 2017 regarding Docket 1255 Notice of Proposed Supplemental Order Regarding Assigned Mediation, the Court suggested that the attorneys for Avaya publish the methodology and factors used in calculating Avaya s value for the Supplemental Pensions, and WHEREAS Mr. Ryan Preston Dahl, Esq, attorney for Avaya, immediately after the hearing on 5 October 2017 suggested that I him with any questions regarding the valuation of my Supplemental Pension, and WHEREAS I ed Mr. Ryan Preston Dahl, Esq in the evening of 5 October 2017 with a list of questions regarding my Supplemental Pension, a copy of which appears as Attachment A, and WHEREAS to date I have not received a reply from Mr. Ryan Preston Dahl, Esq, and nothing has been posted to Prime Clerk or other public venue regarding the methodology or common factors used by Avaya to value the Supplemental Pensions of Avaya retirees, and 2

3 Pg 3 of 11 WHEREAS once Avaya discloses its methods and factors, it may be appropriate for me to amend my claim to account for the methods and factors disclosed by Avaya, (other Avaya retirees may also wish to amend the claims they have already filed), and WHEREAS the attorneys for the Official Committee of Unsecured Creditors have not filed an objection to the adequacy of the Disclosure Statement filed in Docket 1106, and WHEREAS Avaya retirees Supplemental Pension claims are in excess $80 million, which represents over 26% of all General Unsecure Claims represented by the Official Committee of Unsecured Creditors, and WHEREAS Ms. Erica Richards, Esq, an attorney for the Official Committee of Unsecured Creditors, immediately after the hearing on 5 October 2017 suggested that I her with any concerns I had regarding representation of myself or other Avaya retirees, and WHEREAS I have sent an to Ms. Erica Richards, an Associate at the firm representing the Official Committee of Unsecured Creditors, requesting her firm go on record with the Court to compel Avaya to disclose the methodology and common factors Avaya used in valuing the Supplemental Pensions of Avaya retirees and to perform appropriate due diligence on the methods and factors once they are disclosed (a copy of my chain beginning 5 October 2017 with Ms. Erica Richards appears as Attachment B), and WHEREAS the attorneys of the Official Committee of Unsecured Creditors have not petitioned the Court to force Avaya to disclose the methods and common factors used to value the supplemental pensions, nor have they committed to do appropriate due diligence once Avaya discloses that information, THEREFORE, I respectfully request the Court to order Avaya to do the following: 1) Fully disclose the methodology and common factors used to value the Supplemental Pensions of all Avaya retirees. The methodology disclosure should include all steps necessary to replicate the valuation, including how it addressed pension survivor options, the bump-up provision, any tax withholding Avaya expects to make from the lumpsum settlement, the tax gross-up of the settlement if income tax is withheld, pension payments missed to date, and any other factors considered by Avaya. The common factors disclosure should include things such as the discount rates and their provenance, any actuarial tables used and their provenance, any life expectancy tables used and their provenance, tax withholding rates, and any other common factors used by Avaya. This disclosure should occur at least 7 days prior to the cutoff of Plan Objections. 3

4 Pg 4 of 11 2) Fully disclose to each Avaya retiree in writing the specific factors used to calculate that employee s Supplemental Pension value. That disclosure should include the age or birth date of the retiree and his/her spouse, if applicable, the survivor option elected by the retiree, the monthly or annual gross value to the Supplemental Pension, the anticipated tax withholding from the lump-sum settlement, if any, and the amount calculated by Avaya for the value of the Supplemental Pension. The purpose of this disclosure is to assure that no errors were made in the calculation of the settlement. Such disclosure to be made as soon after the methods and factors are published as practical. 3) Notwithstanding the planned hearing on 15 November 2017, change the bar date for Avaya retirees who have claims on file for Supplemental Pensions, and who wish to amend their claims after Avaya provides the disclosures requested in items 1 and 2 above. The new bar date for amended claims should be 21 days after Avaya mails its individual disclosures to the Avaya retirees. This provision should not be interpreted as a desire on my part to move or change the Ballot date, Objection date or the date for commencement of the Confirmation Hearing. For purposes of this request it is acceptable to me for the new bar date for amended claims to occur after the hearing. FURTHERMORE, I request that the Court order the attorneys for the Official Committee of Unsecured Creditors to do the following: 1) Perform reasonable due diligence on the methodology and common factors disclosed by Avaya. Such due diligence should include an evaluation of the appropriateness of the methods used and the appropriateness, accuracy and provenance of the specific factors disclosed. 2) Complete due diligence prior to the cutoff for Plan Objections. If the due diligence raises issues where Avaya s methods are incomplete or incorrect or if the common factors are incorrect, outdated or do not correspond with the values in use at the time of the initial filing, then the attorneys for the Official Committee of Unsecured Creditors will file timely and appropriate Plan Objections and negotiate appropriate resolution. 3) Publish the details of any due diligence performed by the attorneys for the Official Committee of Unsecured Creditors on the Prime Clerk website, or other venue that the Court finds appropriate. Respectfully submitted, Dated October 17, 2017 Bethlehem, Pennsylvania /s/ 1032 Resolution Drive Bethlehem, PA Telephone: (484) remberger@live.com 4

5 Pg 5 of 11 Copies via to: United States Bankruptcy Court, Southern District of New York The Honorable Stuart M. Bernstein, bernstein.chambers@nysb.uscourts.gov United States Bankruptcy Court Kirkland & Ellis LLP New York attorneys for the Debtors Jonathan Henes, P.C., Esq jonathan.henes@kirkland.com Christopher J. Kochman, Esq christopher.kochman@kirkland.com Kirkland & Ellis LLP Chicago attorneys for the Debtors Patrick J. Nash, P.C., Esq patrick.nash@kirkland.com Ryan Preston Dahl, Esq rdahl@kirkland.com The United States Trustee for Region 2 Susan D. Golden, Esq susan.golden@usdoj.gov Morrison & Foster LLP attorneys to the Official Committee of Unsecured Creditors Lorenzo Marinuzzi, Esq Lmarinuzzi@mofo.com Johnathan I. Levine, Esq JonLevine@mofo.com Erica Richards, Esq Erichards@mofo.com Davis Polk & Wardell LLP attorneys to the DIP Agent Damian Schaible, Esq damian.schaible@davispolk.com Akin Gump Strauss Hauer & Feld LLP attorneys to the Ad Hoc First Lien Group Philip Dublin, Esq pdublin@akingump.com Naomi Moss, Esq nmoss@akingump.com Stroock & Stroock & Lavan LLP attorneys to the Ad Hoc Crossover Group Kristopher M. Hansen, Esq khansen@stroock.com Sayan Bhattacharyya, Esq sbhattacharyya@stroock.com 5

6 Pg 6 of 11 Attachment A RE: Follow up from today s Avaya bankruptcy hearing Thu 10/5, 8:33 PM rdahl@kirkland.com Mr. Dahl, I was a pleasure to meet you today at the Avaya Bankruptcy hearing. I appreciate you volunteering to get information for me. If you could get the specific assumptions and values used by Avaya in calculating the value of my pension, I would appreciate it. Specifically, I am looking for the following kinds of information: 1. The gross monthly (or annual) value of my supplemental pension. (This is to make sure we agree on the same starting number.) 2. The survivor assumption used. 3. The life expectancy for my wife and myself. I would like the specific source of those numbers. Life expectancy is also calculated from a specific point in time. I would like to know what point in time was. 4. If an actuarial table was used, what is the table? How old is it? Please provide me a copy of that table. 5. My pension has a bump up provision. If my wife dies before I do, the pension bumps up to the higher monthly rate as if I had elected the no-survivor option. What is the monthly rate that Avaya assumed my pension would bump to? How was this provision accounted for? 6. What discount rate was used for future payments? What was the source of the rate? What was the effective date for these rates, i.e. were these the rates in effect on the date Avaya filed bankruptcy? 7. How to the payments Avaya has already missed figure into the calculation? 8. What health and life style factors were considered, if any? 9. Right now, I do not pay federal income tax on my pension until I receive it. If Avaya settles my pension in a lump sum, that lump sum will be taxed immediately. How did Avaya gross up my pension so that the post-tax income stream matches the current monthly after tax amount I receive today? Thank you for volunteering to get this information for me. Bob Emberger remberger@live.com 6

7 Pg 7 of 11 Attachment B RE: Follow up questions from today's Avaya Bankruptcy hearing Thu 10/5, 9:05 PM erichards@mofo.com Ms. Richards, I was a pleasure to meet you today at the Avaya Bankruptcy hearing. I appreciate you volunteering to serve as a point of contact for the Avaya retirees. I do have some specific questions for you: 1. As attorneys for the Official Committee have you or your firm reviewed my filing in Docket 1208 PLAN OBJECTION OF ROBERT EMBERGER TO FIRST AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION OF AVAYA INC. AND ITS DEBTOR AFFILIATES? If so, has it taken any position for or against the points raised in my objection? If not, do you or your firm intend to take any position, for or against all or any portion of my objection? 2. As attorneys for the Official Committee have you or your firm reviewed the assumptions used by Avaya in calculating the values Avaya assigned to the pension amounts. A. Are the discount rates reasonable? Are they current? Thank you, B. If actuarial tables were used, are they current? C. What is the source of the life expectancies assigned to the retirees and their spouses. Is it current? D. Avaya pensions have a bump up provision. If the retirees spouse dies before the retiree does, the pension bumps up to the higher monthly rate as if the retiree had elected the no-survivor option.? How was this provision accounted for? E. Right now, retirees do not pay federal income tax on their pension payments until they receive them. If Avaya settles retiree supplemental pensions in a lump sum, that lump sum will be taxed immediately. How did Avaya gross up the supplemental pensions so that the post-tax income stream matches the current monthly after tax amount received today? F. How to the payments Avaya has already missed figure into the calculation? Bob Emberger remberger@live.com 7

8 Pg 8 of 11 RE: Request for assistance getting answers to PBGC questions Fri 10/6, 7:47 AM erichards@mofo.com Ms. Richards, There is a lot of confusion on the part of the Avaya retirees regarding the benefits provided by the PBGC on our primary pensions. Can you reach out to your counterpart representing the PBGC and get definitive answers to the following questions: 1) The PBGC sets annual maximums based on the date it takes over the plan. There is a different table for each year and a separate table for the survivor option elected. Can you confirm that the 2017 tables are the appropriate tables? 2) The maximum pension on each of the tables mentioned above varies by age. Can you confirm that the age to use is age that you were on the date that Avaya filed bankruptcy? 3) Avaya offered a 50% survivor option and a 100% survivor option. The PBGC website only shows a 50% option. One retiree told me that the PBGC will support the 100% option. Can you confirm that the PBGC will support both the 50% option and the 100% option? 4) Both the regular pension plan and the supplemental plan contained a bump up clause for those retirees who elected a survivor option. The bump up specified that if the spouse died before the retiree, the retiree s monthly pension would bump up to the higher monthly rate as if no survivor option had been elected. Can you confirm that the PBGC will support the bump up? 5) Can the PBGC provide copies of all three tables referenced above, i.e. no survivor, 50% survivor and 100% survivor that I can post to the Avaya retiree website? Thank you in advance for getting answers to these questions. It will go a long way to settling a lot of confusion and uncertainty that exists. Bob Emberger RE: Follow up questions from today's Avaya Bankruptcy hearing Richards, Erica J. <ERichards@mofo.com> 10/7/2017 7:41 AM. Hi Mr. Emberger, It was good speaking with you yesterday. Below are responses to your questions: 1. We have reviewed your plan objection, although the Committee has not yet taken a formal position with respect to it. However, as Judge Bernstein noted at yesterday s hearing, the approach suggested in your objection is likely impractical, since there are thousands of creditors in this case and it is not necessarily correct to assume that a commercial creditor will in fact receive the tax benefits described in your objection. 8

9 Pg 9 of My firm has not reviewed the specific assumptions used by Avaya in calculating pension claim amounts. As counsel to the Committee, we do not represent individual creditors in the case and cannot advise individual claimants regarding the merits of their particular claims. In the first instance, it is up to individual creditors to review the amount of their claim as scheduled by the Debtors and to determine whether they believe those amounts are correct or not. If you have any questions about how the claim amount was determined, Debtors counsel should be able to provide you with that information, and I believe the Court in fact directed the Debtors to file such information on the docket at the hearing. If you have not already done so, I suggest you send this list of questions to Ryan Dahl with a request that they be addressed in whatever is filed. To the extent you disagree with the Debtors calculation of your claim, that disagreement will be resolved through the claims objection process. In addition, I have forwarded your questions for the PBGC to our contacts there and will let you know when I receive their response. Please let me know if I can be of assistance in the meantime. Best, Erica ERICA RICHARDS Associate Morrison & Foerster LLP 250 West 55th Street New York, NY P: +1 (212) RE: Re: Follow up questions from today's Avaya Bankruptcy hearing Fri 10/6, 12:53 PM Richards, Erica J. (ERichards@mofo.com) Ms. Richards, I thank you for your prompt reply. I look forward to seeing the reply from the PBGC when you get it. Bob Emberger RE: Re: Follow up questions from today's Avaya Bankruptcy hearing Sat 10/7, 7:41 AM Richards, Erica J. (ERichards@mofo.com) Ms. Richards, I was babysitting my 3-year-old granddaughter yesterday and I did not have time to think carefully about your response to my second bullet point. After she went to bed last night I thought about it well into the night. I am not asking your firm to opine on the merit of my claim. I will do the best I can when the time comes. However, the issues as to actuarial tables used, the 9

10 Pg 10 of 11 source of the life expectancies, and the income tax treatment assumed are common across all of the Avaya retirees. I remind you that the Avaya retirees represent over 25% of the dollars your firm represents as attorneys for the The Official Committee of Unsecured Creditors. At the hearing on Thursday, Judge Bernstein asked why I didn t object earlier in the process when the assumptions were missing from the initial disclosure. Let me ask you, as attorneys for the Official Committee, why didn t your firm intercede at that time. For the entire sub-class of Avaya retirees, the numbers Avaya provided did not match a single claim by a retiree. Wasn t your firm the least bit suspicious at that time? I believe at a minimum, that the General Unsecured Creditors have a right to expect a certain amount of due diligence on the part of your firm. I suggest that, not only should you have advocated for the release of the assumptions used in the pension calculations at that time, but an external review of those assumptions by a competent external auditor such as C&L, E&Y, or Deloitte would have been appropriate. At the same time that I wrote you, I wrote an even more detailed set of questions to Mr. Dahl regarding the specific detailed assumptions used by Avaya in the calculation of my specific pension amount. I will continue to press him for answers regarding my specific case. At this time, I am requesting that: 1) Your firm go on record with the Court asking to compel Avaya to disclose of all common assumptions used in calculation of the pension amounts prior to the close of balloting on approval of the plan. I do not believe waiting for Avaya to follow up on Judge Bernstein s suggestion that they publish their assumptions at some unspecified time in the future is sufficient 2) Your firm apply the level of due diligence your firm feels is appropriate regarding the assumptions is made once Avaya discloses them. Are the life expectancy tables current? Does the discount rate used by Avaya match the commercially available rates at the time they filed? Are the discount rates appropriate for the life expectancies assumed (i.e., I hope they didn t use a 30 year rate)? Is the income tax treatment of the distribution consistent with what the Avaya retirees are now receiving? I do not believe that there are many bankruptcy cases involving pensions. I certainly hope not. I hope you can see that the supplemental pension issues are somewhat different than those in an ordinary bankruptcy case. I applaud the work your firm has done in getting the proposed settlement rate up from the initial 8.6% to the proposed 19.7%. I ask now that you apply the same level of effort to our pension claims. Bob Emberger RE: Follow up questions from today's Avaya Bankruptcy hearing Richards, Erica J. <ERichards@mofo.com> Mon 10/9, 11:31 AM Mr. Emberger, 10

11 Pg 11 of 11 The Debtors have advised us that they are already preparing responses to your questions and are determining what form of pleading those responses will take. We will continue to press them to file that information as quickly as possible. Please feel free to call me with any other questions in the meantime. Regards, Erica ERICA RICHARDS Morrison & Foerster LLP 250 West 55th Street New York, NY P: +1 (212)