Altice International — US Litigation, October 2026
All,
Please find our unchanged analysis on Altice International here.
The US litigation against Altice International goes well beyond a conventional LME challenge. A group of creditors holding c.$9bn of secured debt, including Arini, Invesco and Rockford Tower CLOs, filed a complaint in New York yesterday (13th October) alleging that Patrick Drahi and the wider Altice group systematically transferred value out of the restricted group through c.$5.4bn of intercompany loans, a disputed $2.4bn MCN-related cancellation and the diversion of proceeds from the $4bn sale of Altice's BT stake. Unlike a conventional LME dispute over creditor ranking, the central question is whether Altice went beyond the flexibility permitted by its financing documents and whether the courts can restore value to the creditor pool.
Creditors allege a multi-year scheme to move value to parent and affiliate entities, followed by the removal of businesses representing most of the operating earnings from the restricted group. The strategy is to attack the transactions themselves and recover the underlying assets, rather than accept the resulting creditor hierarchy as a fait accompli. The allegations remain unproven, but the combination of alleged value leakage, the scale of the operating businesses involved and the attempt to challenge competing security makes this a potentially significant recovery case for Altice International creditors and a wider test of the limits of aggressive liability management.
The Five Alleged Prohibited Transactions
1. The Lux Intercompany Loans ($5.4bn)
Starting in 2021, Altice International made a series of loans upward to Altice Luxembourg (its parent and not an obligor under the credit documents) totalling approximately $5.4bn. The plaintiffs allege these were not genuine loans: they carried no bona fide interest rate, their maturities were repeatedly extended without compensation, and Altice Luxembourg is a holding company with no operations and no ability to repay. Altice International itself described one €390m tranche on the Q1 2024 earnings call as "a dividend at the Altice International level."
The complaint characterises the loans as disguised restricted payments made to circumvent the Restricted Payments covenant (s.4.05 of the 2020 Indenture), which prohibited dividends when leverage exceeded 4.0x, a threshold Altice International consistently breached.
2. The April 2026 Intercompany Loan Cancellation ($2.4bn)
Since 2020, Altice International has had the unilateral right to convert its mandatory convertible notes (MCNs, originally issued to Altice Luxembourg in 2015) into equity at no cost.
Rather than exercising that option, it accrued approximately $997m of PIK interest and used it to set off portions of the Lux Intercompany Loans.
Then, in April 2026, it finally converted the MCNs, issuing approximately 2.055bn new shares to Altice Luxembourg, but immediately cancelled those shares for no stated business purpose. Under Luxembourg law, the cancellation of those shares created a new $2.4bn repayment obligation from Altice International to Altice Luxembourg.
Altice International then used that manufactured obligation to set off a further $2.4bn of the Lux Intercompany Loans. The net effect was a $2.4bn transfer of value to Drahi for no consideration, structured to look like a routine corporate event.
3. The Siphoning of British Telecom ($680m+)
Altice International funded Altice UK's acquisition of British Telecom common stock via an intercompany loan of over $680m.
When Altice UK sold its entire BT stake for approximately $4bn, it did not repay the receivable owed to Altice International. Instead, the receivable itself was novated upward, first to Altice Group Lux, then to Altice Luxembourg, permanently removing it from the restricted group. The restricted group thus funded the acquisition and then lost both the asset and any claim on the sale proceeds.
4. The Siphoning of Altice France and OXG
Sometime between late 2024 and September 2025, Altice Luxembourg's approximately $6.7bn equity stake in Altice France (SFR) was transferred to Altice Group Lux, (above Altice Luxembourg in the structure and outside the reach of Altice International's intercompany loan receivable) for no consideration.
Separately, Altice Luxembourg's 50% stake in OXG Glasfaser (the German fibre joint venture with Vodafone) was transferred to Geodesia Holding, a Drahi-controlled entity, ahead of Geodesia's agreed sale of OXG to Société Générale (announced around September 2026).
Neither Altice International nor Altice Luxembourg received any meaningful consideration. On the OXG transfer specifically, if the Société Générale sale completes, the remedy for creditors shifts from asset recovery to tracing cash proceeds or seeking damages, a materially harder path.
5. Project Déjà Vu (Altice Caribbean / Altice Portugal)
Announced November 2025. Altice Caribbean (the holding company for the Dominican Republic business, operated through Altice Dominicana) and Altice Portugal (MEO) were
(a) transferred out of the restricted group to a direct subsidiary of Altice Group Lux for no consideration, and
(b) designated as Unrestricted Subsidiaries. Together, Altice Portugal and Altice Dominicana accounted for 79.8% of total adjusted EBITDA.
The designation purported to release creditors' liens over those assets and discharge the guarantees of the relevant entities. Section 9.02(b) of the 2020 Indenture requires the written consent of holders of at least 75% in aggregate principal amount of the 2028 Notes before any such release. The plaintiffs allege that consent was not obtained, rendering the releases void.
A further complication: Fidera Group subsequently lent approximately $865m against Altice Portugal's assets, creating a competing secured claim over the very collateral the plaintiffs are seeking to claw back.
The Legal Claims
The complaint pleads 15 causes of action across three bodies of law.
Contract claims (New York law, 2020 Indenture)
Breach of s.4.03 (affiliate transactions at arm's length)
Breach of s.4.05 (restricted payments -- the Lux Intercompany Loans and the April 2026 cancellation)
Breach of s.4.09 (asset sales)
Breach of s.5.03 (corporate existence)
Breach of s.9.02(b) (collateral release without 75% consent -- Project Déjà Vu)
Breach of the implied covenant of good faith and fair dealing
Alter ego liability against Altice Luxembourg and Altice Group Lux (overlapping boards, shared offices, accounts and personnel, complete dominion over the issuer)
A notice of default was served under the 2020 Indenture on 14 July 2026 by holders of over 25% of the outstanding notes. The 60-day cure period expired on 12 September 2026, triggering a continuing Event of Default. A further Event of Default arose under s.6.01(8) (security interest ceasing to be in full force and effect) 10 days after Project Déjà Vu, given the purported release of liens without required consent.
Fraudulent transfer (New York Debtor and Creditor Law, ss.273-274)
Actual and constructive fraudulent transfer claims are pleaded separately in respect of each of the three principal transfers: the Lux Intercompany Loans, the April 2026 cancellation, and the BT siphoning. The actual fraud claims allege that each transfer was made with intent to hinder, delay and defraud creditors, disguised by book entries and announced after completion. The constructive fraud claims allege transfers at less than reasonably equivalent value at a time when Altice International was insolvent or held unreasonably small capital.
Luxembourg Actio Pauliana (Article 1167, Luxembourg Civil Code)
For transactions structured under Luxembourg law, the complaint also pleads the Luxembourg civilian equivalent of a fraudulent transfer claim. A successful Actio Pauliana can render a transfer unenforceable against creditors and, via the related Action Oblique (Article 1166), allow creditors to pursue derivative claims on behalf of the debtor.
Relief Sought
A declaration that the Prohibited Transactions breached the 2020 Indenture and that Events of Default are continuing.
A declaration that the Unrestricted Subsidiary designations of Altice Caribbean and Altice Portugal and the associated collateral releases were void ab initio and of no legal force.
Unwinding of the fraudulent transfers.
Imposition of a lien over the diverted assets to secure approximately $9bn of secured debt.
A declaration that the Fidera loan purportedly secured on Altice Portugal is junior to the plaintiffs' continuing liens.
An injunction preventing further transfers by Altice International and Altice Luxembourg pending repayment in full.
The complaint was filed with an unassigned index number on 13 October 2026. Whether any application for a temporary restraining order or preliminary injunction has been made -- in particular over the Fidera loan or the OXG proceeds -- is not stated in the filing and is the most time-sensitive procedural question for holders.
Background
Altice International S.à r.l. and its subsidiary Altice Financing S.A. are the issuer and borrower respectively under approximately $11bn of secured debt: a term loan credit agreement (originally dated January 2015, amended through October 2023) providing over $3bn of US dollar and euro term loans, and three series of senior secured notes issued under indentures dated 2020, 2021 and 2024, with the 2028 Senior Secured Notes (governed by the 2020 Indenture, New York law) being the primary vehicle for the noteholder claims.
The credit agreement and indentures contain substantially mirroring covenants, including restrictions on payments to the parent, asset sales, affiliate transactions, corporate existence and collateral releases.
Yesterday, on 13 October 2026, a group of creditors holding approximately $9bn of that secured debt filed a 112-page complaint in the Supreme Court of the State of New York, Commercial Division. The plaintiffs include Arini Credit Master Fund, Invesco (through multiple CLO vehicles and managed funds), Rockford Tower CLOs, ACOF II and several others.
The action names Patrick Drahi personally as the controlling party, alongside Altice Financing, Altice International, Altice Luxembourg, Altice Group Lux, Altice Caribbean, Altice Portugal and a series of other group entities as defendants.
Why This Differs from a Conventional LME
A conventional liability management exercise operates through the credit documents: the issuer uses flex in the indenture (drop-down baskets, Unrestricted Subsidiary designations, consent thresholds, exchange mechanics) to restructure its liabilities, typically with the cooperation of a subset of creditors. Creditors lose value through contract mechanics; the defence is that they could have organised to block or participate.
The core of this complaint is different. The plaintiffs allege that the primary transfers (the Lux Intercompany Loans, the BT novation, the Altice France and OXG disposals) bypassed the credit documents entirely: assets were moved by corporate resolution at entities above the restricted group, and the restricted group's receivables were cancelled through manufactured obligations. The fraudulent transfer causes of action are available precisely because these transactions were conducted outside the indenture, not through it.
If the plaintiffs succeed, the remedy is not a renegotiated recovery rate, it is unwinding, re-attachment of liens, and subordination of any intervening creditors, including Fidera. That is a materially more powerful outcome than anything achievable in a pure covenant dispute, and it is why this case is structurally different from the creditor-on-creditor conflicts that have characterised recent European LME litigation.
Happy to discuss.
Tomás
E: tmannion@sarria.co.uk
T: +44 20 3744 7009
www.sarria.co.uk