Managed service provider TPx Communications entered court-sanction mediation with Arista Networks earlier this month after filing a lawsuit to retain VeloCloud support services.
The telco-turned-MSP, which filed for Chapter 11 bankruptcy in June is proceeding with a reorganization plan with its creditors, alleged that Arista is withholding already-paid-for software updates and administrative tools to force it into a $46 million subscription deal. TPx said the restrictions threaten its ability to serve customers and survive bankruptcy restructuring.
TPx, which canceled a bankruptcy auction due to a lack of qualified bidders on Aug. 10, filed the Arista complaint on Aug. 28 in the U.S. Bankruptcy Court for the Southern District of Texas. TPx asserted that Arista breached the companies’ contract and violated bankruptcy protections. It asked the court to restore the disputed services and access so that it does not have to “accept materially degraded support,” according to the complaint.
Arista acquired VeloCloud from Broadcom in 2025. The platform runs TPx’s managed SD-WAN offering across more than 13,000 edge devices. Edge appliances, data center gateways and a cloud-hosted orchestrator must run compatible software, making updates, bug fixes and security patches essential to reliable service, TPx said in the complaint.
TPx said it has paid Arista and VeloCloud’s previous owners more than $59 million since 2016. That includes roughly $2.34 million paid in May — $500,000 to convert 12,143 licenses to perpetual use and about $1.84 million for three years of support.
The companies disagreed over what that support payment buys. TPx said a 2021 amendment fixes the price of its initial three years of support after conversion, with current pricing applying only to later renewals. It also said support historically remained the same regardless of license type.
According to an Aug. 29 declaration filed by David Zahn, TPx’s SVP of network engineering and operations, Arista representatives said there was “no interest from Arista to negotiate” while TPx retained its perpetual-license rights. Arista later quoted approximately $46 million for three years of subscriptions, which TPx must purchase while surrendering its perpetual licenses to regain the disputed services, according to Zahn.
Arista painted a different picture in a May 6 letter attached to Zahn’s declaration. TPx paid $2.34 million for license conversions and limited technical support, the vendor said. Software upgrades, hosted orchestration and other subscription services required separate payment at current prices under another contract provision.
TPx “persistently ignores” that paying the specified fees “does not entitle it to the same benefits as a subscription service,” Arista said. The proposed subscription price included a significant discount reflecting the value of TPx’s perpetual licenses, according to Arista.
Arista provided subscription-level services for four months but “will not continue to provide this level of service going forward,” the vendor said in its response. The letter warned that upgrade access would end May 20. TPx paid the $2.34 million during the week of May 11, Zahn said.
TPx alleged Arista nonetheless curtailed updates, security fixes, platform controls and technical resources. In a July 10 email attached to Zahn’s declaration, Arista’s attorney wrote, “There certainly has not been any attempt by Arista to withhold required services,” and asked TPx to identify unresolved support tickets and the contract provisions involved.
Arista further restricted VeloCloud customers’ administrative access July 20, reserving the Operator Superuser role for its own administrators because of a security risk, according to a notice attached to Zahn’s declaration. TPx said the change left user management, device provisioning, diagnostics and some compliance work dependent on Arista. In a July 20 letter to customers included in the filing, Arista said its VeloCloud support staff could perform needed system properties operations.
In a July 27 support email attached to the declaration, Arista Account Manager Patrick Cowan said that software upgrades for perpetual licenses are “available only if they are the only way to solve an issue.” For the customer problem under review, Arista offered a software downgrade or configuration change instead, per Zahn’s account.
According to Zahn, a late-July security incident at Arista required certificate updates on customer devices. The incident did not affect TPx’s environment, but Arista’s access restrictions gave the vendor sole control to perform updates, he said. Arista then scheduled the work with insufficient notice and at disruptive times, causing customer outages, Zahn added.
In a declaration supporting TPx’s emergency mediation request, Zahn noted six of TPx’s largest customers had been harmed by withheld software or outages associated with Arista-controlled maintenance, or had indicated their relationships were at risk. Those customers represent more than $714,000 in monthly recurring revenue, or more than $8.5 million annually, TPx said. One suffered an outage across 110 locations, another experienced a full enterprise outage, and at least one threatened to cancel, Zahn said.
Before the suit was filed, Arista challenged TPx’s plans to keep or transfer the VeloCloud contracts through bankruptcy. Arista’s July 21 objection addressed TPx’s bankruptcy notices listing VeloCloud contracts. Arista said TPx gave it eight days after the restructuring-plan notice to object, had not provided every listed agreement and disclosed “essentially no information about any potential purchaser.”
Arista also said TPx had not supplied financial projections for the reorganized company.
Arista said TPx needs permission that had not been granted to carry the software and trademark licenses into the reorganized business or transfer them to a buyer. While Arista had not identified any overdue payments from before bankruptcy under the listed agreements, it reserved the right to revise that stance after reviewing missing contracts.
Arista did not explicitly state that it would end all support after TPx’s bankruptcy proceedings were settled. TPx acknowledged that Arista’s technical assistance center remained available.
The licensing fight predates Arista’s acquisition of VeloCloud. TPx in September 2024 accused Broadcom — which then owned VeloCloud via its November 2023 VMware acquisition — of threatening to block perpetual-license conversions and force it to repurchase subscriptions. Broadcom subsequently retracted its account director’s statement about TPx’s conversions and promised to fulfill the agreement, according to documents filed in the case. TPx sought the same assurance from Arista in August 2025.
A court-appointed mediator will now try to resolve the dispute, according to a filing dated Sept. 1. The two parties were directed to find a location, date and time for the proceedings and submit briefs detailing the points of contention. No timeline was set for the conclusion of the mediation process.
