In a significant escalation of a high-stakes legal battle, lenders to the heavily indebted telecom giant Altice USA have enlisted the powerhouse law firm Sullivan & Cromwell to defend them. This move comes in response to a groundbreaking lawsuit filed by Altice USA last month, which accuses the lenders of forming an "illegal cartel" to shut the company out of the US credit markets.
The Unprecedented Lawsuit and Key Allegations
The US arm of billionaire Patrick Drahi's telecom empire, which recently rebranded as Optimum Communications Inc., sent shockwaves through financial circles with its legal action. The company sued a group of prominent lenders, including Apollo Capital Management LP, Ares Management LLC, and BlackRock Financial Management Inc. The core allegation is that these lenders entered into a "cooperation agreement" that illegally acted as a cartel.
This type of lawsuit is the first of its kind to be initiated by a borrower. It directly challenges the legality of common creditor pacts, which are designed to give bond and loan holders more negotiating power by acting as a unified bloc rather than as individual entities. The case has thrust these often-overlooked agreements into the legal and regulatory spotlight.
The Legal Firepower Assembled
To counter this aggressive legal challenge, the group of Altice USA lenders is assembling a formidable legal team. They have now retained Sullivan & Cromwell, a firm renowned for its deep expertise in antitrust and complex litigation. This firm will work alongside Akin Gump Strauss Hauer & Feld, which the creditors had already hired earlier.
On the other side, Altice USA is being represented by Kellogg, Hansen, Todd, Figel & Frederick, a law firm known for its antitrust prowess and credited as the architect of this bold lawsuit. The lenders' advisors, including Akin Gump and PJT Partners, have already told creditors that they believe the lawsuit has no legal merit, according to previous reports.
Broader Implications for Corporate Debt Markets
The outcome of this case could have far-reaching consequences for the US credit market and how distressed companies interact with their creditors. If Altice USA succeeds, it could redefine the rules of engagement for lender groups and potentially make it harder for them to coordinate during debt restructurings or negotiations.
The lawsuit underscores the severe financial strain at Altice USA, which has been struggling under a massive debt burden. The company's decision to take such a confrontational legal route highlights the high stakes involved in its efforts to manage its liabilities and secure future financing. Representatives for Sullivan & Cromwell, the lender group, and Altice USA did not immediately comment on the latest developments.
