Weighed down by a heavy debt load and upcoming maturities, Optimum Communications (f/k/a Altice USA) and CSC Holdings embarked on a uniquely aggressive approach to dealing with lenders. Optimum made waves when it disclosed on 1 June in an SEC filing that it entered into three transactions to “protect and maximize stakeholder value” in advance of “anticipated discussions” with CSC Holdings’ lenders.

This aggressive maneuver by the publicly traded broadband communications provider is a not-so-subtle move by the company’s founder and controlling shareholder, Patrick Drahi, seemingly to protect his interests in the company by moving unrestricted assets outside of lenders’ reach. Rather than forcing CSC Holdings’ lender group to the negotiation table, the move could prompt further litigation between the parties if CSC Holdings were to end up in Chapter 11.

In this article, the Debtwire legal analyst team discusses the transactions and how CSC Holdings’ lenders could use the threat of an attack on the transactions as fraudulent conveyances as leverage against Optimum.

Optimum, CSC Holdings employ borrower-on-lender violence to restore lender-on-lender violence 

As of 31 March 2026, CSC Holdings had USD 21.8bn in outstanding funded debt, including approximately USD 5bn in loans and USD 16.8bn in notes. As shown in the table below, approximately USD 6.2bn of that debt is set to mature in 2027.

Optimum’s management has openly announced the need for “meaningful debt reduction,” as noted in Debtwire’s 1Q26 Credit Report discussing the company, yet its strategy for bringing creditors to the table has been singularly aggressive. First, it sued them.

In November 2025, Optimum and CSC filed a complaint against Apollo Capital Management, Ares Management, BlackRock Financial Management, GoldenTree Asset Management, JP Morgan Investment Management, Loomis Sayles & Company, Oaktree Capital Management, and PGIM in the US District Court for the Southern District of New York. They accused the lenders of violating state and federal antitrust law when they entered into a cooperation agreement. Notwithstanding that entry into cooperation agreements is an age-old practice of lenders entering into contracts to protect their contractual rights, Optimum argued that by doing so, the lender group blocked its possibility to enter into refinancing transactions and LMEs that could have deleveraged the company. They also accused the lenders of conspiring to restrict competition in the leveraged finance market, arguing that the cooperation agreement effectively functions as a group boycott and price-fixing mechanism. According to the Optimum, under ordinary market conditions, the lenders that became parties to the cooperation agreement would compete with each other by transacting with Optimum or other debt investors of Optimum’s outstanding debt. The cooperation agreement intentionally bars them from doing so. Based on this theory, Optimum and CSC seek declaratory and injunctive relief to void the cooperation agreement, plus treble damages under federal antitrust law.

The defendants moved to dismiss the complaint in May 2026, arguing that enforcing their contractual rights does not rise to the level of restraining trade under antitrust laws. Optimum held talks with the lender group in early 2025, but failed to reach a deal, Debtwire previously reported.

Insulating valuable assets

In Debtwire’s 7 May credit report referenced above, Debtwire’s credit analyst team predicted that, given CSC Holdings’ upcoming maturities, they “fully expect to wake up on a random Tuesday in the not too distant future to news of something substantial.” Debtwire was off by a day, however, as Optimum and CSC Holdings announced on 1 June – a Monday –  that they consummated three significant transactions. After the litigation (not surprisingly) failed to yield a meaningful debt restructuring, the companies transferred unrestricted assets – i.e., the Optimum East Cable business and Optimum’s 50.01% stake in Lightpath – to a newly formed unrestricted subsidiary, CSC Investments II LLC (Unsub Topco). The following illustration shows where Unsub Topco sits in the company’s corporate structure.

Source: Optimum Updated Financial Disclosure, dated 1 June 2026

Next, Optimum engaged in a private placement transaction and a private exchange transaction. Through the private placement transaction, the newly formed Unsub Topco issued Series A preferred units valued at USD 300m to undisclosed institutional accredited investors.

Unsub Topco then engaged in a two-part exchange transaction; one with Next Alt and its affiliate, Next Partner, and another with certain of Optimum’s Board members and executive management. For one, Unsub Topco issued Series A preferred units valued at USD 200m to Next Partner in exchange for Optimum Class A (5,846,652 shares) and Class B (74,153,348 shares) common stock owned by Next Alt. Next Alt is a personal holding company of Patrick Drahi, who is its controlling shareholder and a member of Optimum’s board of directors. As of 27 May 2026, Next Alt beneficially owned approximately (i) 39.6% of Optimum’s outstanding Class A shares and (ii) 99.9% of Optimum’s outstanding Class B shares – i.e., approximately 94% of the voting power of Optimum.

Unsub Topco also issued additional preferred units valued at USD 12.4m to certain members of Optimum’s board of directors and executive management in exchange for 4.9 million Optimum Class A shares. This transaction is illustrated in the following table.

Unsub Topco also announced, on 1 June, a tender offer whereby it would purchase up to 120,000,000 of Optimum’s Class A shares at a price per share of USD 2.50 (representing an aggregate purchase price of USD 300m), to the seller in cash, less any applicable withholding taxes and without interest.

In sum, Optimum’s transactions were designed to insulate its valuable East Coast cable and fiber businesses from lenders by placing them in the newly-formed Unsub Topco. The transaction enabled the new subsidiary that holds the unrestricted (and now shielded) assets to raise USD 500m in private preferred equity. Of that amount, USD 300m was earmarked for Unsub Topco’s cash tender offer for up to USD 300m of Optimum common stock held by its public stockholders at USD 2.50 per share. Also, Unsub Topco exchanged USD 200m of preferred units for Optimum common stock held by Optimum’s controlling stockholder, Next Alt S.à r.l., at the same USD 2.50 per share. Notably, Drahi agreed to swap a portion of his Optimum shares for preferred shares in Unsub Topco, which holds the assets at issue.

Paul Berger, as trustee for The Paul Berger Revocable Trust,[1] an Optimum shareholder, commenced an action in Delaware Chancery Court against Drahi, Optimum, Next Alt, and Next Partner (among others) on 9 June seeking to enjoin the USD 300m tender offer. According to Berger, through the exchange, the defendants obtained direct equity investments on favorable terms in the unrestricted assets while minority shareholders were excluded from participating. Berger complains that although the company “claims it may allow public stockholders to participate in a similar exchange at a future date, it has not yet done so, and against that looming uncertainty is requiring shareholders to decide now whether to tender their shares.” Further noting the disparity in treatment between public shareholders and the defendants, Berger complained that “[t]hrough the Tender Offer, which is set to expire on June 30, Defendants are forcing the Company’s stockholders to choose whether to exit their investment in Optimum for paltry cash payment after insiders did the same in exchange for the valuable Preferred Units.”

Berger also attacks the other transactions discussed above by asserting that “[d]espite these benefits to insiders and the Company’s controller, no independent committee of the Board approved the Restructuring and Exchange Transactions. The Company did not even disclose the Restructuring and Exchange Transactions until June 1, 2026, after they were already completed.”

Optimum, on the other hand, stated that “[t]o establish market terms for the Unsub Topco preferred units, Unsub Topco, acting under the supervision of a special committee of independent managers . . . , engaged in a rigorous marketing process to raise $300 million of preferred units in a private placement to institutional investors.” Optimum noted that the resulting terms were ultimately negotiated with and agreed to by leading third-party institutional investors.

Berger brings claims for breach of fiduciary duties and seeks an order enjoining the consummation of the tender offer “unless and until all material information necessary for Optimum stockholders to make a fully informed tender decision has been disclosed.” He has also asked the Delaware Chancery Court to order Optimum to implement corporate governance reforms to increase its “independence from Drahi, including, without limitation, the appointment of additional independent directors.”[2]

Fraudulent transfer leverage

The unrestricted assets that CSC Holdings transferred to Unsub Topco were indisputably valuable. In fact, Optimum projected that the East Coast cable business alone will generate USD 1.8bn in adjusted EBITDA for the next several years. Rather than defending themselves, as they were forced to do in the anti-trust litigation, the lenders may opt to take the offensive by attacking Optimum’s asset transfers as fraudulent conveyances if CSC Holdings enters Chapter 11. In other words, if the company needs to commence a Chapter 11 case down the road, that option would be burdened by the threat that lenders then could argue that the transfers of the unrestricted assets discussed above are voidable as fraudulent transfers – both intentional fraudulent transfers and constructive fraudulent transfers.

The Bankruptcy Code allows for the avoidance and recovery of two types of fraudulent transfers – actually fraudulent and constructively fraudulent. An actual fraudulent transfer has occurred if a debtor has transferred property within two years of a bankruptcy filing with actual intent to hinder, delay, or defraud creditors.

Intentionally fraudulent transfers are often difficult to prove because the pleading standard is heightened; i.e., fraud must be pleaded with particularity to survive a motion to dismiss. Thus, the lenders would need to adequately plead that CSC Holdings transferred the unrestricted assets to Unsub Topco with the intention of hindering, delaying, or defrauding them – i.e., shielding them from the lenders’ reach in the event of a default. Given the difficulty in pleading a transferor’s actual intent, in the fraudulent transfer context courts allow parties to allege fraudulent intent by pointing to the following eight “badges of fraud” from which such intent can be inferred:

(1) lack or inadequacy of consideration;

(2) the family, friendship or close associate relationship between the parties;

(3) the retention of possession, benefit or use of the property in question;

(4) the financial condition of the party sought to be charged (i.e., CSC Holdings) both before and after the transaction in question;

(5) the existence or cumulative effect of a pattern or series of transactions or course of conduct after the incurring of debt, onset of financial difficulties, or pendency or threat of suits by creditors;

(6) the general chronology of the events and transactions under inquiry;

(7) a questionable transfer not in the usual course of business; and

(8) the secrecy, haste, or unusualness of the transaction.[3]

As Judge Martin Glenn of the US Bankruptcy Court of the Southern District of New York explained in the case of Celsius Networks in 2025, the “presence or absence of any single badge of fraud is not conclusive proof of fraudulent intent.” Rather, “the confluence of several badges of fraud may constitute clear and convincing evidence of actual intent.”

Here, the lenders seemingly would have a good argument that the first three badges of fraud are present. CSC Holdings does not appear to have received anything from Unsub Topco in exchange for the transferred assets; note that the arrow in the above diagram depicting this portion of the transaction (the transfer of assets to Unsub Topco from CSC Holdings) only goes one way. Also, CSC Holdings and Unsub Topco are both ultimately controlled by Drahi, and consequently Optimum will effectively retain the use and benefits of the transferred assets. The lenders could also argue that the seventh and eighth badges of fraud are present, as the transfer clearly was outside of the ordinary course of business and does not appear to have been made public until after its completion.

Certain statements of the company would bolster an intentional fraudulent transfer claim. For example, Optimum stated in its 1 June press release that the asset transfer “has the added benefit of insulating the Optimum East Cable business from any potential consequences of a future default under the CSC Holdings Debt documents or the failure to reach a consensual comprehensive resolution with the Co-Op Group, including reducing the possibility that the Unsub Topco Group would file for relief under chapter 11 if the Company determines that it would be prudent for CSC Holdings to do so.”

A constructive fraudulent transfer, on the other hand, has occurred if a debtor transferred property within two years of a bankruptcy filing, received less than a reasonably equivalent value in exchange for the transfer, and was either (i) insolvent at the time of the transfer or rendered insolvent because of the transfer, (ii) engaged (or about to be engaged) in business or a transaction for which any property remaining with the debtor was an unreasonably small capital, or (iii) intended to incur, or believed that the debtor would incur, debts that would be beyond the debtor’s ability to pay as such debts matured.

As noted above, it does not appear that CSC Holdings received reasonably equivalent value from Unsub Topco in exchange for the transferred assets although, as discussed below, Optimum likely would disagree. The fight in a constructively fraudulent transfer dispute largely would also hinge on one of the three solvency prongs. This would be highly fact intensive and require factual evidence and testimony from witnesses regarding CSC’s financial state both before, during, and after the transfer. This portion of the dispute would be timely and costly for both sides.

In its defense, Optimum could argue that CSC Holdings still, albeit now indirectly, holds the transferred assets and that it structured transactions that allowed CSC Holdings to raise USD 500m, which it used to buy up Optimum common stock. Optimum may argue that the transactions ultimately benefited CSC Holdings because the company now, through Unsub Topco, indirectly controls Optimum common stock that it could offer to lenders to equitize a portion of their debt. Through that equity, the lenders ultimately would, indirectly, own a portion of company that owns the transferred assets.

The lenders would not be the only parties warning of negative consequences flowing from any potential Chapter 11 filing (i.e., fraudulent transfer claims). The failure to reach an out-of-court deal could also give rise to substantial tax liability, according to Optimum. More specifically, Optimum is a consolidated group for tax purposes. Therefore, if the CSC Holdings’ lenders were to enforce remedies against their collateral and take assets or equity from CSC, this would effectively deconsolidate the company and, Optimum argues, thereby trigger a tax liability ranging between USD 4bn and USD 4.8bn in a potential free fall Chapter 11 filing. The extent to which this argument actually bears weight remains to be fleshed out.

Engaging or enraging?

Optimum’s asset transfers have brought the parties to a crossroads and the ball is now in the lenders’ court. As Debtwire reported, Optimum is set to present a deal to its lenders’ advisors detailing how it proposes to restructure the overleveraged telecom group, and some lenders are looking for Optimum to agree to equitize a portion of its balance sheet as part of a restructuring. According to Optimum, the equitization option would allow all parties to side-step the alleged tax liability. However, the lenders also have colorable fraudulent transfer claims. Although constructively fraudulent transfer claims are often easier to prove than intentionally fraudulent transfer claims, that is not necessarily the case here for the reasons discussed above.

In any event, Optimum is working against a deadline as approximately USD 420m in interest payments are due in the fourth quarter. The asset transfers undoubtedly enraged lenders, but how lenders react remains to be seen. In engaging with Optimum, they have some degree of leverage with fraudulent transfer claims. We expect that if a restructuring deal is ultimately reached, the lenders, at minimum, would require that Optimum and CSC withdraw with prejudice the antitrust complaint.

 

Prior to joining Debtwire, Sara was a law clerk to two judges in the United States Bankruptcy Court, S.D.N.Y. and practiced in the Financial Restructuring Group at Clifford Chance, where she represented financial institutions (as secured and unsecured creditors, defendants in adversary proceedings, and participants in DIP financings) in high-profile restructurings. She also represented foreign representatives in Chapter 15 cross-border cases.

This report should not be relied upon to make investment decisions. Furthermore, this report is not intended and should not be construed as legal advice. ION Analytics does not provide any legal advice, and clients should consult with their own legal counsel for matters requiring legal advice. All information is sourced from either the public domain, ION Analytics data or intelligence, and ION Analytics cannot and does not verify or guarantee the adequacy, accuracy or completeness of any source document. No representation is made that it is current, complete or accurate. The information herein is not intended to be used as a basis for investing and does not constitute an offer to buy or sell any securities or investment strategy. The information herein is for informational purposes only and ION Analytics accepts no liability whatsoever for any direct or consequential loss arising from any use of the information contained herein.

Related Links:

Shareholder Delaware Chancery Court Complaint

Debtwire Dockets: Optimum Communications, CSC Holdings, LLC v. Apollo Capital Management, et al

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[1] Berger brings the action as a class action, stating in his complaint that he believes “there are hundreds, if not thousands, of Class members. As of May 27, 2026, and after giving effect to the Exchange Transaction, there were 282,656,994 shares of Class A Company common stock issued and outstanding.”

[2] On 13 June, following a conference before the Delaware Chancery Court, Berger’s counsel filed a letter with the court stating that the court directed counsel to provide a good faith basis for seeking the appointment of additional independent directors. In the letter, the firm (Labaton Keller Sucharow) cited case law that courts have broad discretionary powers to structure injunctive relief in a way that will be as fair as possible to all the competing interests. He also stated that he is not aware of any case law that prohibits the granting of such relief.

[3] See In re Celsius Network, 676 B.R. 647 (Bankr. S.D.N.Y. 2025).