(Bloomberg) -- Cloud computing and networking provider ConvergeOne has reached a deal with a group of creditors to restructure its balance sheet and receive fresh equity as part of a potential bankruptcy filing, according to people with knowledge of the matter. 

The company, which was rebranded as C1 in October, has been operating under a grace period from creditors as it negotiated a deal to slash its expensive debt, said the people, who asked not to be identified discussing a private matter. The company has been seeking support from its lenders and other key parties that would allow it to exit Chapter 11 quickly in what’s known as a pre-packaged filing, the people said. 

Chapter 11 bankruptcies allow a company to continue operating while working out a plan to repay creditors. 

Under the restructuring plan, the company plans to pay off vendors in full, some of the people said. ConvergeOne will also receive fresh money from existing lenders and current shareholder CVC Capital Partners, those people said. 

Messages left with the company and CVC were not returned.

The company has been struggling with industrywide supply chain problems, rising interest rates and operating problems, S&P Global Ratings wrote in a note downgrading the company in September. ConvergeOne’s debt includes a more than $1 billion term loan maturing in 2026. 

CVC provided a costly loan last year to help build up cash reserves, Bloomberg previously reported.

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