Altice USA Accuses Creditors of ‘Illegal Cartel
- Altice USA, controlled by Patrick Drahi, has launched a lawsuit against its major creditors, accusing them of colluding to force the company into bankruptcy.
- On May 3, 2024, Altice USA filed a lawsuit in Manhattan federal court against a group of creditors holding the majority of its $26 billion in debt.
- Traditionally, disputes over debt terms have revolved around contract or securities law.
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Altice USA Sues Creditors, Alleging Antitrust Violations in Debt Restructuring
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Altice USA, controlled by Patrick Drahi, has launched a lawsuit against its major creditors, accusing them of colluding to force the company into bankruptcy. This unprecedented move applies antitrust law to a debt restructuring, escalating tensions in distressed debt litigation.
What Happened?
On May 3, 2024, Altice USA filed a lawsuit in Manhattan federal court against a group of creditors holding the majority of its $26 billion in debt. the suit alleges that these creditors engaged in illegal collusion to gain control of the company through a forced bankruptcy, as reported by the Financial Times. Altice claims the creditors violated U.S. antitrust law by coordinating their actions to undermine the company’s financial stability.
The Legal Strategy: Antitrust in Debt Restructuring
Traditionally, disputes over debt terms have revolved around contract or securities law. The application of antitrust law to debt restructurings is a novel approach. Experts have debated whether competition claims are appropriate in these commercial disputes, but Altice USA is pushing the boundaries. This action follows a similar, though distinct, competition lawsuit filed in April 2024 concerning Swiss company Selecta, where bondholders sued other bondholders over a debt swap agreement, as noted by the Financial Times. The Selecta case, while also involving competition claims, differed in that it was bondholders suing *other* bondholders, not the company suing its creditors.
Altice’s strategy hinges on demonstrating that the creditors’ coordinated actions harmed competition by unfairly pressuring the company.Success coudl give companies facing distressed debt more leverage in negotiations and potentially deter aggressive creditor tactics.
Who is involved?
Altice USA: the U.S. telecoms affiliate of Patrick Drahi’s empire, facing important debt obligations. Patrick Drahi is a French-Israeli businessman and the founder of Altice.
Creditors: A group of hedge funds and asset managers holding approximately $26 billion of Altice USA’s debt. the specific identities of the creditors involved have not been fully disclosed in initial reports, but they represent a substantial portion of Altice’s debt holders.
Manhattan Federal Court: The venue for the lawsuit, presided over by a yet-to-be-assigned judge.
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