Finance Trade Groups Push to Dismiss Optimum ‘Cartel’ Claims

The Securities Industry and Financial Markets Association and the Managed Funds Association, alongside other industry bodies, moved Thursday (March 26) to file a brief supporting lenders, including Apollo Global Management. The case stems from allegations by Optimum, a company owned by billionaire Patrick Drahi, that its creditors coordinated as part of an “illegal cartel” to block its access to U.S. credit markets.

According to Bloomberg, the dispute dates back to November, when Optimum, formerly known as Altice USA, filed suit against a group of lenders that includes Ares Management, Oaktree Capital Management, BlackRock Financial Management, and Goldentree Asset Management.

At the center of the case are so-called cooperation agreements among creditors. Optimum argues these arrangements effectively shut it out of financing options, but the trade groups counter that such agreements are a standard and necessary feature of modern credit markets. According to Bloomberg, the organizations described these agreements as “an essential part of well-functioning credit market” that helps ensure equal treatment among creditors.

The case is currently under review by Jeannette Vargas in Manhattan, who is considering whether to grant the lenders’ request to dismiss the lawsuit.

We’d love to be your preferred source for news.

Please add us to your preferred sources list so our news, data and interviews show up in your feed. Thanks!

Add as Preferred Source

Related: Creditors Seek Dismissal of Optimum’s Antitrust Lawsuit Amid Debt Restructuring Fight

Optimum recently amended its complaint, pointing to the withdrawal of a major law firm from representing Altice in a separate matter as further evidence of what it characterizes as coordinated action against the company. Per Bloomberg, the telecom firm argues this development demonstrates the broader reach of the alleged conspiracy.

Industry groups, however, maintain that cooperation agreements serve a stabilizing function, particularly in complex restructuring scenarios. These agreements typically bind creditors to act collectively, preventing individual lenders from negotiating separate deals that could undermine others in the same group. According to Bloomberg, such arrangements have become increasingly common in both U.S. and European debt restructurings.

The trade organizations also framed these agreements as a safeguard against borrowers’ aggressive restructuring tactics. They highlighted liability management exercises, or LMEs, which allow distressed companies to reorganize debt outside of bankruptcy. Per Bloomberg, these transactions often disadvantage minority lenders by subordinating their claims beneath newly issued debt.

In their filing, the groups argued that LMEs can create uneven outcomes within creditor groups, benefiting those who participate while leaving others with diminished value. According to Bloomberg, they described such transactions as exploitative and capable of distorting established norms in corporate lending.

The case, titled Optimum Communications Inc. v. Apollo Capital Management LP et al., is being heard in the U.S. District Court for the Southern District of New York. It could have significant implications for how creditor cooperation agreements are viewed under U.S. law and may shape future restructuring practices across the financial industry.

Source: Bloomberg