Optimum Creditors Sue Patrick Drahi, Claim $2 Billion in Assets Moved Out of Their Reach

A group of lenders filed suit against Optimum Communications in New York State court on Monday, September 28, accusing the company, its controlling shareholder Patrick Drahi, and two former and current CEOs of engineering a scheme to strip creditors of their claims on valuable network assets, according to Fierce Network and Bloomberg.

Optimum, formerly known as Altice USA, has more than $21 billion in debt, including $6.2 billion coming due in 2027, according to the lawsuit as reported by Fierce Network. The lenders claim the company is "hopelessly insolvent and has been for some time."

The complaint zeroes in on a restructuring Optimum announced in June. Creditors allege the company used a series of transactions to move assets generating more than $2 billion in annual EBITDA out of the group of entities backing its debt, in violation of credit agreements and fraudulent-transfer laws.

"Rather than negotiating in good faith with the CSC Funded Debtholders and acknowledging that Drahi and other shareholders are out of the money, [Optimum] and its co-conspirators executed a series of transactions that moved substantial value available to satisfy creditor claims directly into Drahi's and other insider shareholders' pockets," the lenders wrote, according to Fierce Network.

Defendants named alongside Optimum and Drahi include CSC Holdings, former CEO Dexter Goei, and current CEO Dennis Mathew. The lenders want the transfers unwound, damages recovered, and the defendants held liable.

Optimum isn't taking it quietly. A company spokesperson told Fierce Network it "strongly disagrees" with the allegations and called them "without merit."

"The actions the Company has taken to protect and maximize stakeholder value were conducted in full compliance with its existing debt agreements and applicable law, and the Company intends to address these claims through the appropriate legal channels," the spokesperson said.

The Other Side of the Fight

This isn't a one-way street. Optimum has its own lawsuit pending against some of the same creditors, filed in federal court in New York, according to Data Center Dynamics, which cited Bloomberg's reporting. That case names Apollo Capital Management, Ares Management, and BlackRock Financial Management, accusing them of running what Optimum's complaint calls "a classic illegal cartel."

Optimum alleges a cooperation agreement binds "nearly every creditor holding Optimum's debt" and bars any of them from dealing with the company unless two-thirds of the group signs off. "It is also classic price fixing," the complaint reads, according to Data Center Dynamics. "The cooperative is collectively dictating terms to Optimum by forcing it to transact only at loan and bond prices the whole group will accept."

Optimum says that alleged lockout forced it to go around its existing lenders entirely. Over the summer, the company secured a $1 billion asset-backed term loan facility with Goldman Sachs and TPG Angelo Gordon, maturing in January 2031 with a fixed 8.875% coupon. Optimum claims in its complaint that the deal came with an interest rate two to three percentage points higher than it would have gotten working with its existing lenders and bondholders, according to Data Center Dynamics. The antitrust suit also came a day after Optimum told lenders it would pay off a $1.9 billion term loan more than two years ahead of schedule.

Two Legitimate-Sounding Arguments, No Verdict Yet

The creditors' concern is straightforward: when a controlling shareholder like Drahi restructures a company's asset base while the company is drowning in debt, and the restructuring happens to move billions in cash-generating assets away from the entities that owe the money, that looks like insiders protecting themselves at creditors' expense. The allegations rest on the kind of self-dealing concern that typically arises when creditors' contracts may be undermined.

Optimum's counter also has substance. If a coordinated group of lenders is locking a company out of the credit market unless it accepts terms the whole group approves, that's a genuine price-fixing problem, and it would explain why Optimum went outside its normal lender pool for financing at a higher rate. Neither claim has been tested by a judge.

No court has ruled on either lawsuit. No fraud has been proven, no antitrust violation has been found, and both sides deny wrongdoing. Optimum's spokesperson has said it intends to fight the fraudulent-transfer claims through "appropriate legal channels."

What's not in dispute is the math. Optimum owes north of $21 billion, with $6.2 billion due in 2027, all while Drahi, once one of the biggest names in European telecom after building Altice into a multinational giant before splitting off its U.S. arm in 2018, remains the company's controlling shareholder. Two lawsuits, one state and one federal, are now working through the courts at the same time the debt clock keeps ticking toward 2027.